Dereco, the provider of consultancy services and fund initiator, plans to expand. Next year, the company, which has hitherto operated out of Cologne, plans to open a branch office in Berlin and another one in Munich. The head of Dereco, Tassu M. Degen, also plans to further diversify its range of services. In the future, the Cologne-based company will also invest in project developments on behalf of a handful of family trusts from Germany and the Netherlands.

‘In the future, I envision each of our three branch offices handling transactions worth between 70 and 100 million euros every year,’ says Degen. Therefore more investors and more properties shall be found. Degen wants to increase volumes without falling prey to the accusation of only being interested in quantity rather than quality. In so doing, he will continue to concentrate on office, commercial and residential use types. Now, as before, Degen intends to shore up the targeted volume with a streamlined company structure. He plans to increase the current number of persons employed from seven to a maximum of 16; four of these employees will operate at each of the new branch offices.

Degen entered the property business in 1993 at the age of 20. Since 2001, the company has operated as a service provider. Up to 2009, Degen saw through transactions worth 850 million euros with his company Dereco (formerly Degen Real Estate Consulting). Most of the deals handled by him – almost all of which were direct investments – were on behalf of family trusts; one fifth corresponded to investors such as Hochtief, R+V Versicherung or Hannover Leasing. Dereco acted as an asset manager for about half of this volume.

‘We unearthed a niche in 2001,’ says the marathon runner. The manager, who usually stipulates payment for his services in the form of profit sharing upon the successful sale of property, will also accompany prospective parties during the direct purchase of long-term portfolio properties in the future while, however, putting his company on a broader footing.
Last year, Degen founded the subsidiary Dereco Fund Services, which he jointly manages with the former Ideenkapital manager Christian Middelberg. The company sets up closed-end fund vehicles on behalf of rich private investors. He plans to expand business in private placements in which several investors, above all family trusts, participate. The first special fund of this sort has been operating since June of this year. A Dutch family office wants to purchase property worth up to 85 million euros. The financiers have promised 30 million euros of their own funds. Following the initial purchase of a property in Siegburg there are currently two more under examination in Frankfurt am Main and in Westphalia.

According to Degen’s plans, their sale should have been completed by the end of January 2013. This would still leave a margin for one or two more properties. Next year, Degen plans a second product of this type with a similar size.

Degen’s investors expect a 21% return on equity . The head of Dereco intends to venture into a completely new line of business with a handful of family trusts from Germany and the Netherlands: the plans are to participate in the financing of project developments with private equity. Up to now, this has been the preserve of companies such as Competo Capital Partners and the Ellwanger-&-Geiger-subsidiary E&G Financial Services. ‘We
have secured equity commitments amounting to 50 million euros,’ says Degen. The money will be invested over a period of five to six years over and over again in new projects as and when opportunities arise. From the role of a silent joint venture partner to the provision of 100% of the equity required: anything is possible, he says. Depending on the project, the private equity pool will provide between 5 and 15 million euros. Its investors expect returns on equity of at least 21% p.a. And for Dereco, this business with its profit potential is significantly more lucrative than a life of buy-and-hold strategies.