New TwentyTwo Real Estate targets non-core France, opportunistic Spain

New London-based investment manager TwentyTwo Real Estate will target non-core property in France and is seeking more in western Europe, first setting up in Spain to invest in opportunistic assets and loans, says French-born founder Daniel Rigny.

A former real estate partner at New York’s Perella Weinberg, Rigny says he set up the firm in March last year with backing from high net worth investors and institutions. The first two deals, done in rapid succession in summer, were acquisition of a holding that owns 7,600 French housing units valued at about €1bn, and then purchase of the asset manager for the portfolio. “I spent 10 years at Deutsche Bank on the principal investor side and five years at Perella Weinberg investing its property fund, and simply got to the phase in my professional life where I had a strong desire to set up my own company,” Rigny told PIE. “Once that decision was made I quickly saw a number of opportunities that we could go after.”

The housing portfolio was sold by LBO France and Deutsche Asset and Wealth Management’s real estate arm (formerly RREEF), and bought by Rigny’s group with equity provided by Paris-based Massena Partners and Farallon Capital Management. Rigny won debt funding of €620m in a five-year facility arranged by Natixis, of which 60% was placed with institutions by BNP Paribas Corporate Finance via a
securitisation vehicle.

Six weeks later Rigny, based in London, announced that TwentyTwo RE bought a 40% stake in the housing portfolio’s manager Financiѐre Scaprim, which with 147 staff in 18 offices across France manages €6bn of assets including office, industrial and retail plus 16,000 housing units. “Our ambition is to build Financière Scaprim into a leading independent French real estate service provider to institutional clients,” Rigny said. “As well as increasing our platform in France we are also looking to expand into other European countries such as Spain, where there is an opportunity .. to acquire assets at a significant discount
to historical values and where there is demand for operating platforms meeting international investors’ standards.”

Rigny told PIE the strategic ambition is to acquire and manage real estate in a business model based on providing an integrated service to clients combining property management, asset management and investment management services.

Looking at investment targets, he sees real estate value in France mainly in segments overlooked by large institutions. “The French market is actually very active in some respects but quite different in others. The core market is active; French institutional investors are structurally net investors and are allocating a significant amount of capital to core types of properties. At the same time when international investors move onto the continent, the first market they think of is Paris because that’s by far the biggest property market in the euro area. It’s true that French and international institutions focus on the best properties, office and retail, so that market is quite expensive now because there is a lot of capital chasing it… But it if you look at secondary properties there are fewer buyers. There is still a quite large price gap between sellers expectations and buyers’ expectations so those segments are much less active.”

TwentyTwo RE is already setting up operations to tap opportunistic real estate in Spain. “Now we are looking to make hires in Spain and find the first investment opportunity. The first thing we want to do is set up an operating platform to manage assets and also loans, because of the transactions are likely to come in the form of loan acquisitions. And we need to set up investment vehicles. It’s true there is a lot of opportunistic capital raised on a pan-European basis but there are few opportunistic markets right now when you look around Europe. UK is not an opportunistic market, France is not and Germany is not. Spain is really the market where you can find true opportunities for the profile of capital that is seeking theses kind of assets.”

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