Is the CEE/SEE region likely to attract more institutional investment? (and if so why?)
We tend to work more with family office and private equity capital partners rather than institutional investors, but believe that CEE/SEE likely to attract more commitments based on two main reasons: 1) capital in general increasingly targeting investments across the CEE/SEE region that offer the benefits of core locations/fundamentals at higher yield/opportunistic pricing on a relative basis compared to western Europe; and 2) pan-CEE/SEE NPL portfolios only just starting to be transacted, which should lead to attractive onward sale prospects for individual assets and portfolios without legacy debt liabilities as well as the increased supply helping to prevent yields from compressing too rapidly.
Where are the pockets of opportunity for so-called ‘frustrated opportunistic capital’?
We remain committed to working directly with capital partners who prefer to focus on direct assets and portfolio investments rather than via a co-mingled fund structures. Such opportunistic capital can therefore commit faster to backing us for off-market deals as well as benefitting from our screening the regional markets, fronting initial bids for detailed underwriting, securing debt finance and offering full post-acquisition local asset management capabilities. Since we co-invest our interests and fees are fully aligned and transparent.
We’re also partnering with credit funds targeting NPL work-outs where we can commit to forward purchasing individual assets as a joint approach.
Which asset classes are you focusing on? (and why?)
Investors rightly demanding greater levels of certainty and transparency on target assets/portfolios. We therefore consider all asset classes based on key criteria, including direct real estate investment strategies and NPL work-outs. We’re gradually building a team of local partners capable of offering full asset management capabilities suited to different asset classes. Our advantage being that we’re based across CEE/SEE, have been individually operating in the market for over 15 years representing private equity investors, have an extensive track record and remain committed to sourcing and underwriting deals based on specific co-investment strategies.
Tell us about one of your projects.
Main project currently to build out this co-investment approach to the market which we believe is a new concept for CEE/SEE in general. CEE/SEE-focused investors increasingly preferring to allocate capital to joint ventures and club deals rather than co-mingled funds.
Recent example projects include working on NPL portfolio work-outs backed by global credit fund partners, as well as targeting smaller deal sizes where we we’re looking to jv with family office capital partners for a portfolio investment where we’ll secure debt finance and optimise value through re-positioning and leasing up the underlying assets (mixed-use) and target an onward sale as more institutional-style offering.
You have been part of CEE GRI before what’s in it for you?
Good opportunity to network with CEE/SEE-focused investors and regional contacts who can help introduce interesting target opportunities matched to our co-investment strategic approach.