In addition to purchases for its long-term portfolio of property stock, which are expected to total approx. EUR 100m this year, the DERECO multi-family office has secured another EUR 50m in private equity from associated families to acquire shares in pending joint developments and proprietary projects. The approved funds are not only to be used to finance project developments and buy shares in joint ventures but will also be invested in buying into promising existing real estate in central retail and/or residential locations to be realised conjointly with a respective developing partner.

It was more than a year ago that DERECO identified the financing gap for commercial project developments as an investment opportunity for its families. DERECO already began to buy into several projects of this kind last year. The company intends to enhance its activities in this segment and turn it into a lasting pillar of its business model.

Other equity commitments from associated families totalling approx. EUR 50m will be invested by DERECO, a multi-family office for real estate assets, to engage in several future developments on the basis of a reploughing scheme. Developers will have the possibility to obtain up to 100% of the equity they need for individual projects. As in the past, these projects will amount to approx. EUR 4m to EUR 15m.

“In order to limit the risks for our investors, we are going to pay a great deal of attention to whether agreed investment criteria are observed or not,” says David Noll. In this context, the Asset Manger DERECO places major emphasis on partnering with experienced project developers and investing exclusively in office, retail and residential projects. Besides securing plots and ensuring that applicable plans, permits and/or construction law are complied with, DERECO will only join a project if construction costs and selling options are based on prudent plans and if approx. 35% of the property has already been let in advance (or sold, if the planned construction is to be disinvested in smaller units). Furthermore, a bank has to make a commitment to provide third-party capital, too.

For its investors, DERECO aims at achieving a return on equity (IRR) amounting to approx. 18 – 20% p.a. By the end of 2014, DERECO envisages investing a total of over EUR 100m in joint ventures. Furthermore, the trust firm is going to start purchasing developable existing buildings in city-centre retail or residential locations.