The European real estate market's lack of liquidity is as much a result of the disappearance of competent intermediaries as it is of the credit crisis.
What the market needs, said Robert Bell, founder of Bell Capital Partners, is financiers who can, on the one hand, structure and execute financings and, on the other, coordinate groups of interested investors into syndicates that can fund these financings.
When the market imploded, it left the end investors stranded on one side and borrowers on another. Fast-forward to February and, armed with this knowledge, Bell launched a new real estate venture, Bell Capital Partners, with the help of the experienced hands of Robert Palache. Bell Capital Partners will assist its clients in raising mezzanine debt, hybrid capital and equity for their real estate assets in the U.K. and Europe. "Work on the firm and our investor network started in the first quarter of 2008," Bell said. "So, it was a full year of development before we officially opened."
Over the last year, Bell proved end investors are still willing to bite and unearthed sizeable appetite for mezzanine real estate debt. "I found it difficult to accept that the market had evaporated, and what I found was that beyond the banks, end investors still had significant capital they were willing to put to work," Bell said.
Bell added that, while in the current market buy-siders have less money overall to put to invest, it doesn't indicate that there is no money available.
"In fact, investors have substantial amounts of money to put to work in subordinated real estate capital, but when the banks and their real estate finance staff disappeared, no one was calling the investors anymore," he said. "When the investment banks closed their doors, the communication line was lost between borrowers and these end investors. Over the last ten years, borrowers and end investors did not know who each other were because they were both comfortably dealing with the banks as intermediaries."
Together the duo has more than 20 years of experience between them. Bell has more than 15 years of experience in marketing, originating and executing bank and capital markets-related structured transactions in Europe. He has originated and executed various mandate types in many different European jurisdictions, including acquisition financings, refinancings, restructurings and distressed situations, and has worked on high-profile mandates across a wide variety of industries, including real estate, infrastructure, power and oil and gas. Throughout his career at UBS, Merrill Lynch and Barclays Capital, he has raised billions in limited recourse senior debt, mezzanine debt and hybrid capital for corporates, private equity firms and developers.
Palache is a solicitor, founder and partner of Clifford Chance's securitization and structured finance team and former managing partner of their law firm's finance practice. He was a director at Nomura International, managing director at Barclays Capital and head of the bank's real estate, corporate securitization and infrastructure finance team from 2001 to 2006. He was then managing director, head of securitization and asset monetization group at Morgan Stanley from 2006 to 2008. He has extensive experience across all sectors and markets, including airport refinancings, advising government departments and various high-profile property and M&A transactions. He has recently been working with the shareholder executive within the department of business, enterprise and regulatory reform, providing debt capital markets and structured finance expertise to various parts of government on matters such as monetization of LaunchInvest, refinancing of Northern Rock, sale of the student loan portfolio and Sir James Crosby's mortgage market review.
Freshfields Bruckhaus Deringer has signed on to provide certain legal services to their new venture.
Over the past months, the list of interested end investors, which originally started at 25, has now grown to 42. At the moment, the venture is still in the phase of intensive marketing, but Bell Capital said they are close to signing up mandates.
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