The recent purchase of RREEF US has made DB Real Estate, a division of Deutsche Bank, the world’s biggest real estate fund manager, in charge of assets worth $36bn
DB Real Estate received a boost last month when it bought RREEF US for $406m, bringing an extra $16.2bn of assets under its management. The deal makes the Deutsche Bank division the largest fund manager globally in terms of real estate equity, with $36bn under management.
The deal coincided with the asset manager’s announcement that it had consolidated all related activities under the new brand DB Real Estate. The division has six businesses globally, covering a range of risk profiles and offering products for retail and institutional investors (see table).
The group’s largest division is DB Real Estate Private Equity, headed by David Brush. The division has invested $6bn of equity – $1.5bn from Deutsche Bank and $4.5bn from clients – which, with debt, has been invested in $15bn of transactions. Around 60% was invested in Europe, 25% in Asia and 15% in the Americas, mainly Latin America and Canada. The group is reportedly raising a fund to continue investing in this region.
The private equity group is a legacy of Bankers Trust, which was taken over by Deutsche Bank in 1998. A successful private equity strategy was transferred to Europe with its first UK deal in 1994. Three years later the company undertook its first Asian deal, in Japan.
The group has been behind major deals such as the EDF residential portfolio acquisition in France, which backed a €700m securitisation last year, and a £750m deal to take Bradford Property Trust private. It was also involved in an Italian corporate disposal in 2000, when it formed a joint venture with state-owned energy company ENEL to buy €600m of property.
DB has now agreed to buy ENEL’s 51% share in the venture. “The sale of ENEL’s share reflects the new government’s efforts to have state-owned companies focus on core activities,” says Brush. “We will use this as a vehicle to acquire other property.” This is similar to the strategy DBReal Estate took with Filo, a Spanish quoted company which it has since sold to ING.
Brush puts the group’s recent success down to its ability to snap up assets that have attracted less attention in the markets. For example, while most opportunity funds were looking at the Ras portfolio in Italy, DB quietly sealed a €450m corporate disposal deal with Thales in France.
DBReal Estate is also set to buy the income and growth portion of the Aareal Bank (formerly Depfa Bank) portfolio. Brush says the group will continue to focus on deals in Italy, Germany and France.
In Britain, Deutsche Bank Asset Management UK invests institutional money with the aim of outperforming the IPD benchmark by 1% to 2%. It has just launched a second venture property fund with £300m of debt and equity.
DB Real Estate Germany, meanwhile, comprises the open-ended fund manager that runs DGi, and DG Globale, which invests mainly in Europe, the US and Asia. DB Real Estate Italy also focuses on retail investors, with two funds totalling €400m.
In the US, DB Realty Mezzanine Investment Funds offers global investors returns of 13% to 15% from its mezzanine fund product. It has just closed its second, $350m, fund, which attracted European, Asian and US investors. The RREEF US deal should allow it to offer investors products outside their domestic markets, for example giving German and Australian investors access to US markets. For wider expansion, the group is targeting markets such as Spain, where it already has a good retail business.
DB Real Estate
Winchester House
1 Great Winchester Street
London
EC2N 2DB
Tel 44 20 7545 8000
