Kadens Capital, the new global real estate investment firm established by two former Madison International Realty professionals earlier this year, is attending Expo Real for the first time and says it can see dislocation in the market giving rise to opportunity.
Discussing market realities such as rising interest rates, founding partners, Matthias Cordier and Derek Jacobson, said they were grateful they had no ‘legacy asset management’ to contend with given the current environment, and pinpointed developers as being on their radar.
In July, Kadens revealed it had secured equity of around €200 mln that had been deployed into more than €500 mln of assets. At Expo, Jacobson said: ‘Our crystal ball is no better than anyone else’s, but we are starting to see dislocation.’
With everyone asking about ‘repricing’, Jacobson explained: ‘It is about where the first pressure is coming from. For us, it is developers. It is those with short-term finance, and those are situations causing dislocation or indigestion. There are those with refinancing needs looking for a more creative kind of capital sources where we can play a role.’
Partly what has dramatically changed is bank financing for developers who up until now could rely upon all-in borrowing costs as low as 2% in a country such as Germany, he said. ‘That is a far cry from reality now.’
How Kadens feels about the world leads the founders to believe there is a certain ‘opportunity set’.
Cordier and Jacobson worked together at Madison International for over a decade. Their fledgling firm now has seven people stationed between New York and Frankfurt.
Said Jacobson: ‘I think we see a situation where we can continue to find interesting asset classes and partners to invest with. What we’re very much focussed on is control. There are a lot of situations where there are potential partners where we can not only invest in the real estate but also into those platforms – the op-cos - where we can effectively create better alignment of interest.
‘Matthias and I have been active in so many asset classes and different geographies. I think we can provide know-how, technology and infrastructure to sharp-shooter companies.’
In September, Kadens revealed it had invested in Westbridge Advisory, a leading ESG consultant in Germany. The deal for a minority stake was carried out on behalf of a major Norwegian state fund. At the time, Kadens explained as a new investor, Westbridge now had direct access to international markets outside of Germany.
Kadens has previously disclosed it has around €200 mln of equity to invest and structures its investment via programmatic joint venture agreements either single or multiple investors. That said, the firm does not rule out raising a fund at some point in time.