Cornerstone gains Dutch pension fund mandate

Cornerstone Real Estate Advisers has received a mandate from Dutch pension fund giant PGGM, well-informed sources told PropertyEU.

The size of the mandate is believed to be €200 mln. The capital will be channelled into Cornerstone’s Patriot fund, a $2 bn (€1.45 bn) core open-ended fund offering exposure to offices, retail, hotels and residential in the US.

This is the first time that a Dutch institutional player is investing in the US investment manager and it is believed that more European investors have shown interest. Located in Hartford, Connecticut, Cornerstone is an indirect subsidiary of the Massachusetts Mutual Life Insurance company and is one of the largest global real estate investment managers in the world with over $42 bn (€30 bn) in real estate assets under management.

Cornerstone currently has only €1.3 bn of AUM in Europe, but it is actively seeking opportunities to expand its platform on this side of the Atlantic. Earlier this year, Cornerstone appointed Scott Brown as president of the firm to help lead the company's global expansion. Brown, 50, takes over the role of the current incumbent David Reilly, who remains Cornerstone’s CEO. He joins from CBRE Global Multi Manager (GMM) where he was the Head of the Americas.

In the past, Reilly has made no secret of the fact that he is actively seeking to expand Cornerstone’s footprint in Europe. According to press reports, the company was in the running last year to take over MGPA. The London-based private equity real estate investment advisory company with activities in Europe and Asia-Pacific was ultimately snapped up by US asset management giant BlackRock.

Cornerstone entered Europe in 2010 with the acquisition of London-based Protego. In one fell swoop, it obtained five offices in Europe, including the Nordics, the Netherlands and the UK. The company continues to look for other opportunities in Germany and France and possibly Spain at a later date, Reilly told PropertyEU in an interview. He conceded that Europe is not an easy market compared to the US due to legal, cultural and lending differences. But, he added, the company doesn’t intend to have a base everywhere in Europe. ‘Some countries have a broader stock and a broader sustainable environment - that will be our focus long term. Size is key, so is liquidity and transparency.’

Reilly said Cornerstone is in preliminary discussions with a number of players, but he declined to provide further details of the expansion plans. Asked whether the company planned to grow organically or inorganically, he said both were options. ‘We would opt for inorganic growth if we can find the right entity, a company looking for a new home and a different capital source.’

Cornerstone’s main focus in Europe is on the equity side, but it has also launched a lending programme in the UK which it plans to roll out to Europe within the next 12 months. In mid-February, Cornerstone appointed a former RBS banker, Kristina Foster, as director of real estate finance for Europe. She will be responsible for sourcing new real estate financing to expand Cornerstone's debt business, both in the UK and in mainland Europe and will report to Chris Bates, head of real estate finance for Europe. Bates was appointed in July last year as head of European real estate finance at Cornerstone Real Estate Advisers.