The investment strategies of CORUM’s French SCPIs, which have a structure similar to a REIT, are making waves in Ireland. The company operates three real estate investment funds, managing a portfolio of commercial properties valued at over €4 billion in 16 countries. Since the ramp-up of activity in Ireland in 2015, the funds have purchased more than €500 million of commercial buildings here. I spoke with Phillipe Cervesi, Partner and General Manager/Head of Real Estate, and Galwegian Peter Hester, Global Director of Asset Management for CORUM, the most active fund here, about their strategy.
while most new investors focus on Dublin, the fund historically owned Hewlett Packard’s headquarters in Galway, and after establishing a team here from 2015, its first acquisition was the Harvey Norman retail warehouse in Cork. Since then, the fund has purchased 12 other assets, in Cork, Waterford, Galway, Drogheda and Dublin, including Aviva’s Cherrywood headquarters and Aldi outlet in Sandyford.
Mr Cervesi told me that the investment mix around Ireland is intended to be counter-cyclical and that the funds see huge potential in certain areas of Dublin, Cork and Galway. “This strategy of buying head offices in provincial towns is part of our DNA,” he said..
Mr. Hester’s team of 14 is located in Dublin, Paris, Amsterdam and Lisbon, and he told me they are working hard to add value to assets through lease restructuring, capital investment and increasing the strength of commitments. They work directly with tenants and he pointed out that adding value in the area of environmental, social and governance factors has become a priority; for example, working with tenants to source green energy.
Investments in SCPI come from more than 70,000 clients, Cervesi said, who are mostly private investors. The minimum investment is €189, or one share, and the average investor owns €25,000 worth of shares. Each investor receives a monthly dividend check, beginning six months after investing, which Hester says provides reassurance to investors. “The average investor stays invested for seven or eight years, so the funds are not volatile,” he said. The funds hold properties for a minimum of five years and then consider selling for profit or holding income and continuing to manage the assets.
The funds have performed extremely well, producing an average return of 6pc after fees, since 2012, Mr Hester added. The funds occasionally borrow money up to a maximum of 25% of a property’s value, well below the 40% permitted by law.
Mr Cervesi said that after the completion of regulatory procedures, it is expected that the funds will be open to Irish investors in the near future.
Mr. Hester, CAA seasoned surveyor who previously managed properties for the Irish Life and Aviva funds, told me that one of the reasons for CORUM’s success is its ability to make decisions quickly. “Potential locations are researched well in advance, so when opportunities arise, there is no delay. We are a reliable buyer,” he said. One factor is the structure of the business, he added, which includes procurement teams, which identify properties, a deal team to close the deal, and then the asset management team to add value.
“We all have our specialty, it’s disciplined, diverse and it works very well.”
the funds are looking foropportunities in office and retail specifically. “Performance and quality of tenants are paramount.”