The Road Ahead for CORESTATE and Institutional Clients

Transcription

1 The Road Ahead for CORESTATE and Institutional Clients Audrey Klein Head of International Institutional Clients August 2018 Page 1 CORESTATE Capital Holding S.A.

2 Brief Introduction Experience Audrey Lynn Klein Managing Director >18 years expertise Currently: Head of International Institutional Clients at CORESTATE Previously: Park Hill, Blackstone, Cromwell Education: Bachelor s degree in Economics and a Master s degree in finance, marketing, management & strategy from J.L. Kellogg Graduate School of Management Northwestern University, Evanston (IL, USA) Key Responsibilities Expanding the European and global investor platform, with a focus on International Institutional investors Equity Raising Client Relations Strategy and Business Development Institutionalising CORESTATE Due Diligence Process Page 2 CORESTATE Capital Holding S.A.

3 Institutional Investors Appetite by Region & Strategy for Real Estate ( RE ) Europe is currently the most targeted region among Institutional Investors North America remains a key target along with selective Asian markets Institutions are looking to deploy more capital into RE compared to a year ago 59% of Institutional Investors are allocating to RE (more than to other Alternatives) 1 Average allocation to RE as a percent of Total Assets: 8.8% 1 Value Add Strategy is perceived by Institutional Investors as presenting the best opportunities over the next 12 months 1 1 Preqin Investor Update: Alternative Assets H Page 3 CORESTATE Capital Holding S.A.

4 Institutional Investors Appetite by Region & Strategy for Real Estate ( RE ) Opportunistic 18+ IRR Value Add 13-18% IRR Core Plus 8-13% IRR Core Bonds 5-8% IRR 0 Risk / Leverage * Chart not to scale. For illustration purposes only Page 4 CORESTATE Capital Holding S.A.

5 What are Institutional Investors Main Reasons for Investing in Real Estate ( RE )? 1 Diversification 2 3 Reliable Income Stream Inflation Hedge 4 5 Page 5 CORESTATE Capital Holding S.A.

6 Why is CORESTATE Attractive to the Institutional Market? CORESTATE Core Strategies Student Accommodation Serviced Apartments High Street Retail What German Investors call Niche markets such as Student Accommodation and Serviced Apartments are perceived as more mainstream, although not yet mature, by the wider institutional market We are exploring other products such as Mezzanine debt which Institutional Investors have appetite for Page 6 CORESTATE Capital Holding S.A.

7 Student Accommodation Found in University towns with proximity to campus Cities with strong rental markets All-In concept (inclusive rent, fully furnished) Fully adapted to the needs of students CORESTATE = Leading operator in the DACH region CORESTATE has deployed a significant number of assetsover the last 10 years Uniting investors, asset management, operators and development expertise in a single platform One of the most established track records Page 7 CORESTATE Capital Holding S.A.

8 Serviced Apartments Serviced Apartments combine Temporary Accommodation with Comfort, Flexibility and Services akin to a hotel CORESTATE currently has a volume of 450m in this asset class in Hamburg, Munich, Frankfurt, Dusseldorf, Cologne, Vienna and Zurich Capitalizing on trend towards temporary living and mobilization Job Nomads qualified specialists and managers in knowledge intensive services are an increasing phenomenon of today s working world. These workers have to change their place of work for a certain time Job-seekers, Freelancers and the Self-employed contribute to the increasing demand for serviced apartments Target stay: Medium-term (7-27 nights) Long-term (28+ nights) Page 8 CORESTATE Capital Holding S.A.

9 High Street Retail CORESTATE has deployed > 1bn into 150 assets over 4 years The strategy is almost exclusively High Street Retail in Germany Why High Street Retail in Germany? While the U.S is Over-retailed there are 5 reasons why High Street Retail in Germany will remain healthy Page 9 CORESTATE Capital Holding S.A.

10 The following 5 Factors Will Keep Retail in Europe Healthy 1. Density and Proportion of Malls U.S. 29K SF of retail space per 1,000 people 1 Europe 2,691 SF / Internet Penetration U.S. 9%1 Europe 6%1 3. Lease Types U.S. Co-tenancy clauses restrict types of tenants locations Europe No such provision if certain stores leave, others can too 4. Better Quality Malls U.S. Commoditized product. Millennials hate this Europe Lack of density means Europe has fewer low-quality malls 5. Department Stores U.S. Department stores have pursued aggressive strategies, damaging their brand and reduced pricing strategy Europe centres tend to be more anchored by grocery stores and people tend to shop for groceries weekly in-store. There is less dependence on Department Stores 1 Forbes Article dated Five Reasons the U.K. and Europe Won t Feel America s Retail Pain and Two Why it Might Page 10 CORESTATE Capital Holding S.A.

11 Key Criteria for International Institutional Investors 1. Alignment of employees Most institutional investors expect carried-interest to be distributed to the wider team Equity for senior people also augments the story 2. Reporting Institutional level reporting is critical, conforming to INREV or ILPA standards 3. Governance Institutional investors are looking for accountability from the manager 4. Transparency Information and detail must be presented in a structured and organized manner 5. Due Diligence Most institutional investors expect the manager to have their own Institutional level DDQ such as INREV DDQ 6. Institutional Market Terms Key Man Hurdle Rate Fees etc. Page 11 CORESTATE Capital Holding S.A.

12 Key Target Investors by Region and Country 1. EUROPE Denmark Finland France UK 2. ASIA Hong Kong Japan Malaysia Republic of Korea Singapore Page 12 CORESTATE Capital Holding S.A.

13 Competition and Timing CORESTATE is a Real Estate Manager in Competition with Real Estate Managers Worldwide There are currently approx. 4,000 in the market from North America, Europe, Asia and emerging markets 1 Gestation period to bring a new International Institutional Investor on board takes 6-12 months or more Investors are assessing not only the product but the manager Page 13 CORESTATE Capital Holding S.A.

14 Sample of Current Interest From International Institutional Markets in CORESTATE 1. Canadian Pension Fund interested in helping us build out Student Accommodation in Spain 2. Danish Pension Fund interested in working with us on the Serviced Apartments Sector 3. Finnish Insurance Company interested in helping us build out Serviced Apartments Sector 4. Korean Investors showing interest but no bites yet Building the brand abroad is underway success will come as we continue to build out our internal Institutional infrastructure Page 14 CORESTATE Capital Holding S.A.

15 CORESTATE Capital Holding S.A. CORESTATE Capital Group 4, rue Jean Monnet L-2180 Luxembourg corestate-capital.com Audrey Lynn Klein Managing Director International Institutional Clients Direct-Line: Mobile: Page 15 CORESTATE Capital Holding S.A.