INVESTMENT FIRM Claret Capital is widening its equity base to include Middle Eastern and European investors as it embarks on a drive to more than double the value of its equity investments to in excess of €1 billion by 2010.
The firm, led by businessman Domhnal Slattery, is developing plans to increase the assets under its management to some $5 billion within the next four years. Crucial to that effort is a drive to take advantage of buying opportunities in US real estate as existing investors come under pressure in light of the credit crunch.
Claret's assets under management amount at present to more than $2 billion. Best known as the backer of start-up plane-hire firm JetBird and marine mobile phone business Blue Ocean Wireless, the firm is already a big real estate investor, with some $1 billion in assets under management.
Chief operating officer Tom McAleese said Claret was already expanding its investor base by doing business with firms in France, Germany, Italy and Britain.
"We're in the process of looking to set up an office in London and also in Abu Dhabi and hopefully they'll be up and running by the end of the year."
Claret plans to use equity raised in those quarters to fund the expansion of its real estate interests in the US.
It will concentrate in the first instance on east coast markets such as New York, Philadelphia and Boston, as well as Washington, and will examine all sectors of the real estate market, except residential.
The company, which employs seven investment staff at offices in New York and Philadelphia, has hired former CB Richard Ellis vice-president Joseph Fox as its global head of real estate.
Based on its belief that fundamental economic conditions in the US remain essentially sound, the firm sees opportunities to do business with regional US banks that avoided loss-making investments in subprime residential property.
Mr Fox, also a former executive vice-president at US firm Pitcairn Properties, said Claret would execute three types of property investments in the US: direct real estate investments; private equity deals; and buying distressed commercial property-backed paper on the capital markets. "With many banks not lending and reducing the amount of money they will lend for transactions, by raising equity we can provide liquidity into the market," he said.
The level of leverage available for property investment transactions has reduced to some 65 per cent from 85-90 per cent previously. "Therein lies a problem for many real estate folks and the opportunity for us."
In addition, Claret sees opportunity to recapitalise or buy up "capital-constrained" private equity investors in real estate.
On the capital markets, Claret sees opportunity in distressed mezzanine and B-note commercial paper at a discount. It believes such paper offers attractive yields to investors who are willing to underwrite the underlying real estate.
While Mr Fox believes any recession in the US will be short-lived, he said the investment case was not predicated on an early economic recovery in that market. "Capital markets don't have to rebound for us to be successful in this investment thesis."
