Owned by its management, with US private equity firm Blackstone as the major investor, Valad Europe was formed after the Australian listed company Valad Property Group was split up by the US private equity venture in 2011 as part of a restructuring after the financial crisis.
The fund manager describes its recent acquisition of GE Capital Real Estate’s €570m Polish retail fund as “transformational”.
Following the purchase, Valad Europe now manages €4.3bn of assets in Europe, across 16 funds and mandates. It manages more than 600 assets and 5,500 tenants, using local teams in 22 offices and 12 European countries, totalling 245 people.
The Polish fund acquired from GE Capital is a closed-ended vehicle comprising six high quality shopping centres and three hypermarkets totalling 300,000 m2, located in seven of Poland’s key cities, including Warsaw, Kraków and Wroclaw.
With the addition of these assets to Valad Europe’s AUM, the CEE region will become Valad Europe’s third-largest region, with some €800m of retail, logistics and light industrial real estate.
The deal is the company’s first major corporate acquisition since becoming private. It enables Valad to further expand the range of real estate investment products it offers to investor partners.
The investment products encompass the retail, office, logistics and light industrial sectors, with retail representing nearly 20%, office 25%, logistics 21% and light industrial 33% of total assets.
The acquisition has been funded from Valad’s balance sheet capital reserves, including a co-investment in the fund alongside existing investors. While the acquisition takes in the Luxembourg-based investment adviser and the Poland-based asset management team, GE Capital Real Estate will continue to retain a substantial holding in the fund.
Leleu joins executive committee
As part of the deal, Thierry Leleu, formerly general manager Europe, GE Capital Real Estate Investment Management, joins Valad Europe as head of funds management and will become a member of the executive committee.
David Kirkby, currently Valad Europe’s head of funds management, has been appointed to the new role of chief investment officer. They both report to chief executive officer Marty McCarthy.
GE Capital’s team will join Valad Europe’s CEE team in Warsaw, which has managed the fund since its inception, boosting staff numbers to more than 30.
According to McCarthy: “This is an important acquisition which expands our expertise as a diversified core-plus and value-add real estate investment manager, with the depth and track record in managing office, retail, light industrial and logistics assets across Europe. It is a key element of our growth strategy to acquire funds, GPs and companies which add value to our platform.”
McCarthy says that many of the fund’s investors are already investors in the firm’s other funds. “This transaction also demonstrates our capacity and the willingness of our management team and the company to co-invest alongside our investors, thereby directly aligning our business’s interests to those of our partners,” he adds.
McCarthy, who used to work for GE Capital, says that the Polish deal had been in negotiations for almost a year. The fund is closed-ended and is due to be wound up from 2018 until 2021.
Other recent landmarks include Valad Europe being chosen towards the end of last year to be the asset manager of 25 properties within the Propinvest Gemini CMBS property portfolio.
Administrators at Deloitte picked the firm to take over management of the industrial, office, retail and leisure assets in the Gemini portfolio across the UK.
Gemini was placed into administration in August after PropInvest failed to repay a £950m securitised loan, despite accelerated demands from special servicer CBRE.
Portfolio led by retail
Retail accounts for more than 50% of the portfolio, which at the peak of the market was valued at more than £1.2bn. By last March, this value had fallen to £437.7m.
Major retail assets in the 35-strong Gemini portfolio include the 16,257 m2 Martineau Place in Birmingham and the 32,979 m2 Galleries and Marketgate centre in Wigan, Greater Manchester.
According to McCarthy, the firm was appointed “with a clear remit to improve income and capital values throughout the portfolio in preparation for an orderly disposal programme”.
Valad Europe is working up long-term proposals for the properties and the plan could extend to seven years.
McCarthy says he is targeting the UK for further expansion this year.
www.valad.eu
