EUROPE - Invesco Real Estate has bought around a 75% stake in the 3.5 billion-euro institutional real estate investment arm of Germany’s Hypovereinsbank (HVB) in a deal believed to be worth between 30-50 million euros.
The buy-out follows last year’s statement by HVB that it was focusing its business on distribution rather than pure asset management.
Before the sale HVB had placed both the US and Munich-based real estate investment arms of the group into two separate vehicles. It then sold a 75.1% stake in each to Invesco.
Together the two former HVB teams have around 30 staff – 12 in New York managing around 1.5 billion euros and 18 in Germany managing two billion euros in institutional money.
The deal includes an earn-out provision and HVB will retain the remaining stake in the business.
Guy Barker, who was director of real estate asset management at HVB, now under the Invesco Real Estate label, says the retaining stake was kept to show “continuing commitment” to the institutional clients who invested in the HVB funds.
Barker says HVB plans to hold that stake for at least three years.
Invesco will also keep a distribution agreement with HVB for real estate in the German speaking part of Europe.
The HVB real estate business in Munich was built on taking German institutional money into other European property markets through indirect vehicles.
According to Barker, existing clients are staying faithful to the former HVB team, which is still in place under the Invesco structure.
“All our clients have stayed, apart from one who wishes to withdraw 15 million euros. We anticipate keeping the vast majority of our clients on board and to date there has been strong support for the buy-out process.”
Barker believes that for Invesco the deal represents a direct line into the German institutional real estate market.
“Basically the German money going into real estate is the most important capital source in Europe and it is very difficult to access that from outside.
“We were one of the two market leaders in European property investment for German institutions. Invesco had good US and UK access, but not so much for German institutional money, so in one strike they have got that.
“It’s difficult to do that from a standing start and now they have access to an established client base through our funds. I should imagine that was a major attraction.”
No one at Invesco Real Estate was available for comment at the time of going to press.