Investment manager Federated Hermes is expanding its real estate capabilities into the US market with the acquisition of an 80% stake in FCP Fund Manager for up to $331m (€285.2m).
Federated Hermes said it has agreed to pay $215.8m in cash and $23.2m in stock upfront as well as up to $92m in potential performance payments over the next few years.
FCP, a US real estate investment manager, specialises in the multifamily asset class, deploying capital mainly through equity and several debt vehicles.
Federated Hermes said the deal will expand its real estate capabilities into the US market and complement its existing real estate operations in the UK, managing $5.5bn of assets. The $845.7bn investment manager’s existing real estate investment capabilities in Europe are predominantly based in the UK, inherited from its full takeover of UK-based Hermes Investment Management which completed in 2021.
Real estate sits within Federated Hermes’s $19bn private markets and alternatives business, which also includes private equity, private credit, infrastructure and market neutral strategies.
J Christopher Donahue, president and CEO of Federated Hermes, said: “Upon closing, this transaction will allow Federated Hermes to enter the US real estate market at a time when the multifamily sector enjoys strong fundamentals and significant growth opportunities.
“FCP brings a long-term record of real estate investment performance, which has been driven by a focus on risk-adjusted returns, extensive local and regional market knowledge and deep community relationships.
“An additional attraction is the complementary experience and knowledge of the residential sector, which will be vital as we seek to continue to grow our US and UK real estate businesses.”
Esko Korhonen, FCP founding managing partner, said: “In Federated Hermes, we have identified a firm with shared values and a strong commitment to building a private markets business. FCP is uniquely positioned to lead the private market expansion with Federated Hermes into living sector assets in the US.
“This transaction provides an opportunity for FCP to strengthen its institutional platform, enhance its growth trajectory, and provide expanded resources, further enhancing our position as a leading national real estate firm benefiting our clients and stakeholders.”
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