Growing significance of direct real estate experience in Fund of fund business defines our business model

Some people may consider it a surprising step for somebody having worked for most of his career on the direct real estate side, including firms such as Protego Real Estate Investors and LaSalle Investment Management, to join a fund of fund property investment firm. However, I think it is not and in this column I will explain why.

The property market has changed a lot due to the crisis, and focus on detail at all levels is more important than it ever was before. As a result of this, issues such as risk management, governance and transparency, although usually implemented, are being redefined and require a more in-depth approach.

The consequence of the above is that fund of fund managers, normally operating at a strategic level, will have to extend their activities to the tactical level to obtain the right level of comfort with the investments they want to make.

Furthermore, it becomes clear that fund of fund managers have to change their business model to be able to deliver the returns they initially promised to their investors. This means that, besides investing in funds, alternative strategies such as joint ventures with developers, investments in secondary shares or club deals on the basis of identified opportunities in certain markets, are being tested.

Composition already recognized this trend at a very early stage and, like its investors, looks for more visibility of deal flow, and more impact and control in the relationship dynamics with its local business partners. As a result of this, Composition focused from the start on smaller local property platforms and reporting at asset level. Recent joint ventures emphasize this approach.

From a personal perspective, it is a fantastic opportunity to share all the knowledge and experience I have gained over the years on the supply side with the buying side. Composition offers this possibility and, hopefully, I can contribute to further improving Composition’s knowledge and skills at ‘micro’ level.

Looking forward to doing business with you in the near future!

Maarten Vermeulen
Director Europe