TwentyTwo Real Estate seeks growth in Western Europe

TwentyTwo Real Estate is looking for further acquisitions in Western Europe following a debut purchase in France earlier this year, founder and CEO Daniel Rigny told PropertyEU.

We want to grow our business in Western Europe, particularly in France, where we have just completed two deals, but also in Spain, the UK and Germany. At this time Spain is the market offering the most interesting prospects for opportunistic capital,’ said Rigny.

Rigny is a former partner of Perella Weinberg who left the private equity group in 2012 to set up his own company, TwentyTwo Real Estate, a privately held asset management and investment management business.

Rigny said Spain ‘has experienced a perfect storm’ but parts of its economy are showing signs of recovery. ‘The real estate market was oversupplied, over-leveraged and impacted by a deteriorating economy. The real estate industry, but also the banking sector and a number of local authorities, have been hit by the decrease in property values. They are now very open to international capital, which they feel is needed to restart the market. International investors have an opportunity to acquire assets there at a significant discount to historical values,’ Rigny commented.

The company is looking to invest on an opportunistic basis in real estate or distressed capital structures, he added. ‘We are looking at the largest Spanish cities and we focus on fairly prime properties with the wrong capital structure, or opportunities in which we can access commercial real estate by acquiring mortgage debt.’

APPOINTMENT

To help develop the company’s investment management services across Europe, TwentyTwo Real Estate recently appointed Perella Weinberg’s Christophe Kuhbier, a former colleague of Rigny who is joining as director in the company’s London office. At Perella Weinberg, Kuhbier was in charge of sourcing and the execution and management of real estate investment opportunities covering continental Europe, with a particular focus on France and Spain.

Founded in March last year, TwentyTwo Real Estate has so far sought opportunities in France where Rigny has a 16-year track record. In early September the company completed the acquisition of a 40% stake in the French services firm Financière Scaprim, the manager of around €6 bn of assets consisting of 1.4 million m2 of office, industrial and retail space and 16,000 residential units. The company has a staff of 147 based in 18 offices throughout France and focuses on providing institutional clients with asset and property management services.

Rigny said the deal reflects the company’s strategy to provide a full real estate service offering in the country. ‘My personal conviction is that there is a substantial opportunity for an independent medium-sized company like Scaprim which can implement tailor-made strategies and provide a full range of services to a select number of clients. This is why we have invested in Scaprim and that we are very confident that we will be able to grow our institutional client base and strengthen the company’s position in both the commercial and the residential sectors.’

MAIDEN INVESTMENT

The transaction follows the announcement in June of TwentyTwo Real Estate’s maiden investment, the acquisition of Financière Selec, a €1 bn French residential portfolio which has been managed by subsidiaries of Financière Scaprim for the last 12 years.

The off-market acquisition involved a portfolio of 7,600 apartments spread across over 400 locations in France and used by EDF employees working in the group’s nuclear plants. The assets, valued at over €1 bn, have nine years left on the lease, renewable for another 12 years. The buyer was Powerhouse France, a new investment vehicle organised and managed by TwentyTwo Real Estate on behalf of a consortium comprising Luxembourg-based Massena Partners and funds advised by US-based Farallon Capital Management.

‘The capital structure of this deal was bespoke to fit the profiles of our investors. We constituted two vehicles, a fund organized with Massena, in which the investors were mainly high net-worth individuals, and another investment vehicle organized with Farallon, which attracted mainly international institutional investors,’ commented Rigny.

TwentyTwo Real Estate made an unsolicited offer for the assets during the portfolio refinancing process which was concluded in March 2013. Natixis participated as lead arranger with BNP Paribas acting as placement agent in the €620 mln refinancing which represented the largest debt restructuring seen in France this year. Around 60% of the debt was placed to institutional investors through a securitisation vehicle.

The Selec portfolio, originally composed of 10,200 homes let to energy group EDF, was acquired by LBO France in 2006 in a 54% – 46% joint venture with Deutsche Asset and Wealth Management’s real estate investment business (formerly RREEF Real Estate).

Property EU