Citigroup throws down global real estate gauntlet
The new chief executive of Citigroup’s real estate arm has outlined its plans to create a “top tier” global real estate investment management business in an interview with IPE Real Estate.
“Our mandate is to become a top tier global real estate investment manager and to create institutional-quality investment opportunities for clients of the Citigroup Private Bank as well as institutional clients through the Citigroup Asset Management business and new relationships that we will develop directly,” says Joseph Azrack, president and CEO of Citigroup Property Investors.
“On a global basis we would hope to be mentioned in the same breath with Morgan Stanley, Prudential and LaSalle,” he adds, citing the rival firms’ professionalism, global footprint and research orientation. He says the new unit – part of Citigroup’s Alternative Investments arm - would make use of the bank’s “global financial platform”.
Azrack - who recently joined Citigroup from Boston-based IXIS AEW Capital Management, where he was chairman - says investment strategy would be regionally focused, delivered via a series of closed-end funds.
“We expect to use the power of the Citigroup platform to create investment opportunities for our individual and institutional investor clients and to source investment opportunities through the extensive relationships we have with real estate owners and operators.”
The unit has $4.5bn (e3.7bn) in net asset value in total - with about $1bn in Europe. “We would expect those numbers to increase substantially, possibly triple in magnitude over the next three to five years.”
He adds that Citigroup does not at this time anticipate having a direct or separate account business at the division, with the initial focus being on funds. It will have a public market global REIT investment management business having recently hired Dan Pine and David Kruth as portfolio managers from Alliance Bernstein and will also look carefully at the commercial mortgage-backed securities market in Europe in the coming year.
Azrack declined to be specific on the amount of capital Citigroup is putting in the unit, but says: “It is very substantial - it compares favourably in terms of magnitude with other major corporate and investment banks. It’s fair to say that this initiative is a long-term strategic commitment that is supported by the most senior management at Citigroup and one where the corporation has made a long-term financial as well as strategic commitment.”
The first new products from CPI would launch early in the fourth quarter, with European opportunity funds coming next year.