Your source for monthly real assets transactions, people moves and trends shaping the industry.
To use a famous football quote…in honour of the World Cup…this year has been a game of two halves. At Ferguson Partners, the first six months of the fiscal year were the busiest our firm has seen in its 34 year history, with significant hiring demand from new platform formations (largely North American driven); new strategies (beds, meds and sheds as well as development); DEI and ESG leadership; as well as traditional replacement hiring. As LPs looked to allocate more equity to fewer GPs so, in turn did the GPs look to build out a full suite of risk/return capabilities. Value add and opportunistic investors raised core/core+ funds and traditionally low-risk investors looked to raise higher return vehicles.
Following the outbreak of the Ukraine War there was a marked slow-down, particularly in Europe, as the real estate industry waited to see where rising interest rates and inflation would take us. We are now over six months into this hiatus and the sector is still waiting to see where pricing settles. On the hiring front, this has resulted in some key trends:
- Understandable caution as clients anticipate how the remainder of 2022 and 2023 unfold.
- Those with committed equity are readying themselves for one of the best buying opportunities in a decade. GPs that have raised flexible capital with a Special Sits remit are ready to provide liquidity solutions across the capital stack for struggling investors and developers.
- Investment managers with debt strategies are waiting for valuations to stabilise before moving into the void left by banks who are hampered by CAR challenges. This has resulted in increased hiring demand for platforms with existing debt businesses as well as new entrants – particularly North American firms - who seek to take advantage of the current market dislocation.
- High net worth individuals and family offices re/entering the sector as they are unhampered by fund investment periods and can finance deals with 100% equity until banks’ lending returns to a more normal level.
Ferguson Partners recently completed our European Real Estate Compensation Survey, including compensation data for 48 positions commonly found at European real estate firms. The full report is only available to participants. To participate in next year’s survey, please contact Serena Althaus or Sonya Nicks.
A snapshot of findings:
- Overall, survey participants reported year-over-year growth, with 77% of firms increasing gross assets under management from year-end 2020 to year-end 2021, and 82% anticipating a further increase by year-end 2022. Headcount has also increased at the majority of firms across most European countries, in many cases by more than 20%. The function most in-demand from a hiring perspective is asset management by a large margin (67% of respondents) followed by transactions (40%).
- For 2022, 94% of the participants increased base salaries, with an average company-wide increase of 6.6%. While all levels experienced meaningful salary increases, junior-level employees received the largest increases at 7.4% on average. Looking ahead to 2023, 94% of participants are expecting to make salary increases. For those firms anticipating an increase, the median and average projected companywide increase is 4.3% and 4.7%, respectively.
- Survey participants reported significant increases to 2021 annual incentives relative to 2020, both with respect to the percentage of firms that increased awards (61%) as well as the average increase of 34.6%. These figures are the largest the industry has seen in the past 10+ years. Looking ahead, 2022 year-end bonuses are expected to be more modest, with only 39% of firms anticipating increases, 44% expecting no change, and 17% expecting decreases. For those firms projecting an increase, the average increase will be almost half (18.2%) of what it was last year, with senior level professionals receiving the highest average increases at 24.5%.
- Godwin Developments has created a JV with an unidentified institutional investor to build a £1 billion BTR portfolio.
- AD Ports Group has purchased Noatum Logistics for €660 million.
- A group of investors led by the family office Imfarr has acquired three segments of Berlin’s Quartier Heidestrasse development for €488 million.
- The Paval Brothers have acquired seven office buildings in Bucharest for €370 million.
- Heimstaden has acquired a German residential portfolio for €243 million.
- Hines has appointed Marc Sampietro to lead aparto, its student accommodation business with operations in Spain, Italy, UK, and Ireland.
- Kadens Capital has hired Nikhil Gupta as Chief Financial and Operating Officer.
- Gustav Segerberg has been internally appointed to EQT Exeter’s ExCo.
- Delin Property has hired Raffi Killian as Head of Investments.
- Olivier De Bisscop has joined Befimmo as Chief Portfolio Officer.
Industry Trends and Events
- According to a report by Knight Frank, investors plan to commit €151 billion in additional capital to Europe’s living sector over the next five years.
- Partners Group is launching a dedicated Private Wealth unit to manage €37 billion of capital from private investors.
- Henderson Park is preparing to acquire a majority stake in GBI Holding.
- Arminius has launched a fund targeting the acquisition of up to €1 billion of German offices with the potential for ESG-related upgrades.
- At the final close of its CIO II fund, Castlelake has raised €798 million in capital commitments.
New from Ferguson Partners Europe
Latest news and perspectives.
A comprehensive study of management practices and enterprise benchmarking metrics in the real estate investment management/private equity industries.
Coming this month
MasterMinds: Sophie van Oosterom
Schroder's CEO Sophie van Oosterom offers an insightful conversation about leadership, culture and the future of work in a post-pandemic climate.
In our ESG Leaders conversation series, CREFC Europe Chief Executive Peter Cosmetatos shares perspectives on successful ESG strategies.
Ferguson Partners Europe Activities
Keep up with our team.
The Ferguson Partners Europe team took the train to Brighton Beach to spend the morning litter picking. The weather was very kind to us and it was a great way to volunteer and give back to the community.
Amy McGee and Priya Mehra attended a Q&A where industry professionals who have been through past market cycles shared investment strategy and career advice, based on their diverse experiences. On the panel: Douglas Crawshaw, Towers Watson; Fiona D'Silva, Kennedy Wilson; Jonathan Bayfield, Aviva Investors; Kari Pitkin, Allianz Real Estate; Ben Sanderson, Aviva.
Amy McGee and Priya Mehra attended this conference which included discussions around innovation in the real estate industry, the use of data in tackling the main issues the industry faces, increasing social mobility and socio-economic diversity in the workforce, and looking at the opportunities during a market downturn, both personally and in terms of investment strategy.