Deutsche Finance International or DFI, is a pan-European private equity real estate platform with offices in London, Munich, Madrid and Luxembourg. We pursue value add and select opportunistic research-driven strategies driving superior risk-adjusted returns through deep value investing, capitalising on trends and active asset management.
We seek under-managed or under-valued assets or businesses with fixable impairments or potential for improvement. Through hands-on asset management and targeted development, DFI and our partners aim to add value to our investments by increasing income, upgrading the user experience and making them more investible for institutional capital.
We believe that the real estate needs of society are evolving rapidly driven by the disruptive forces of social change, demographics and technology. As a result, we view real estate as a customer facing service, not just a product or passive asset. Our platform is designed to capture opportunities within this changing landscape and we take a proactive, end-user oriented approach to our investments. The firm seeks to collaborate with innovative forward thinking occupiers and operators.
We invest in all types of real estate, although our particular specialty is in customer-centric and operationally intensive real estate, where our expertise allows us to unlock value by optimising operational performance in addition to physical and financial enhancements. Examples include student accommodation, private rented residential, hospitality, retirement/assisted living, mixed-use and leisure. We principally target European cities with deep markets and favourable growth prospects. While DFI typically focuses on small and middle-market transaction of €5 million to €50 million in equity value, we will invest in materially larger deals when we have a strong conviction that they present value and opportunity. Our thematic investment strategies are designed for assembling portfolios or platforms of scale. We invest in direct asset, corporate and credit situations.
DFI is the investment advisor to DFI funds, related co-investment partners and Deutsche Finance Group’s direct European real estate investment activity. We are responsible for the origination, execution, financing, asset management, operation and disposal of investments. Our platform serves global institutional clients, such as pension funds, insurance companies, financial institutions and family offices. We prefer an active partnership with our clients built on high levels of transparency, frequent communication and robust reporting. We are strongly aligned with our clients since the firm’s Partners co-invest alongside them in a personal capacity.
The large majority of DFI’s transactions are sourced off-market or on a privileged basis, leveraging our extensive global network of operating and local partners, lenders, intermediaries and advisors.
We are a committed, multi-disciplinary team with an entrepreneurial mindset, who are wedded to a set of core values that shape how we go about reaching our goals. We recognize that our key stakeholders make vital contributions to our business and we develop mutually beneficial relationships.
Our overriding goal is to provide our clients with access to differentiated value-add and opportunistic real estate investments that generate consistent and superior risk-adjusted returns. We achieve this by following a disciplined and creative investment approach; employing and partnering with exceptional talent; and driving value creation through active asset management.
Ownership and History
The firm is part of Deutsche Finance Group or DFG, a global investment management firm that specialises in private market real estate and infrastructure investments. Active since 2005, DFG has a reputation for accessing differentiated investment opportunities and best-in-class specialist local investment and operating partners. DFG currently manages €8.6bn of AUM and is headquartered in Munich. DFG is privately owned and regulated by the Federal Financial Supervisory Authority of Germany, BaFin.
DFI was established in 2016 by former collaborators Frank Roccogrande and Gavin Neilan to broaden and deepen DFG’s product offering and investor base by building a direct real estate investment platform.
DFI is independently managed by its Founding Partners with a dedicated best-in-class team operating across offices in London, Munich, Madrid and Luxembourg. The firm benefits from being part of DFG by leveraging the group’s origination capabilities, investor base and global perspectives to support the execution of DFI’s investment strategies.
“Whenever you find yourself on the side of the majority, it is time to pause and reflect”
– Mark Twain
Our Investment Approach
DFI aims to deliver consistent and superior risk adjusted returns, with a priority on capital preservation. We target under-managed or under-valued investments with scope to add value through active asset management and capture asymmetrical returns. For every investment we make, we compile a detailed plan to enhance the asset or business, which incorporates an extensive risk/return analysis. Our approach to investment is based on the following core principles:
Price versus Value
We seek to buy assets below their intrinsic value as this provides a dependable foundation for profit generation and manages risk by creating a margin of safety.
Thematic and Insightful
We target real estate markets and sectors that combine attractive growth fundamentals with defensive characteristics. Favour locations with supply-demand imbalances, which benefit from urbanisation trends and infrastructure investment. Search for opportunities in real estate caused by the disruptive forces of technology, social change, demographics, and regulation. We continually assess macro-economic, investment market and occupational market cycles to inform stock selection and buy/sell decisions.
Active Value Creation
During our period of ownership, we seek to drive growth and create value at the asset level through proactive asset management. Examples of how we achieve this include:
- Active leasing and re-leasing
- Refurbishment and Repositioning
- Targeted development and re-development
- Building platforms of scale and assembling portfolios through the acquisition of complementary assets
- Planning enhancements
- Improved property management and expense optimisation
- Placemaking and re-generation
- Asset restructuring and recapitalization
- Working with management teams to build enterprise value in corporate investments through various activities that include:
- developing strategy and nurturing expansion
- improving governance
- providing investment and working capital
- developing new products
- aligning incentives
- adding capabilities
Selecting Best-in-Class Operating Partners
We often work with local operating partners and asset management teams, who provide specialist market or asset class expertise to optimise the performance of our investments. We carefully identify the right partner for each investment, factoring in the relevant market, asset class and risk profile to ensure we align ourselves with partners with exceptional capabilities, strong local networks and shared values and vision.
Our focus is typically on small to medium-sized transactions, equating to €5 to €50 million of equity value, a segment in the market where we perceive there to be less competition. Nevertheless, our investment strategy is highly flexible: we can shift to materially larger deal sizes, new asset classes, geographies and themes when we see market dynamics evolve to capture opportunities.
Understanding, recognising and controlling risk is an integral part of decision-making and organisational processes at DFI and seen as critical for successful and defensive investing.
Utilise Appropriate Leverage
We target markets and opportunities where the yields of purchased properties are comfortably higher than the financing costs. This generates a cash on cash income return and reduces the reliance on the residual value of each investment. DFI completes a rigorous sensitivity and scenario analysis to match the appropriate debt structure to the cash flow profile of each asset.
Diversification of Risk
We actively manage portfolio construction for our client accounts and funds to diversify risk across geographies, asset classes, real estate cycles and investment profiles.