Och-Ziff Capital Management’s head of European real estate is leaving the New York-based hedge fund by mutual consent.
The departure of David Gillerman does not signal any pullback from investing in European real estate according to Real Estate Capital‘s sister title, PERE. Rather the firm has embarked on a hiring program intended to bring aboard four to six more junior professionals who will report directly to president and senior principal Steve Orbuch, who is based in New York.
Orbuch joined Och-Ziff from Blackstone in 2003 to form Och-Ziff Real Estate (OZRE). Since its founding, OZRE has raised two private equity real estate funds with more than $1.2 billion of equity committed by the firm and its investors.
The platform is now raising its third fund, Och-Ziff Real Estate Fund (OZREF) III, for which it is targeting $1 billion in commitments. According to its first quarter results, OZRE had already collected $952.2 million for the fund. In total across asset classes the group has $44.6 billion of assets under management.
It’s not clear what proportion of OZREF III will be allocated to European investments. However, one person told PERE that Och-Ziff stilll sees a significant opportunity in Europe and is keen to take advantage of it by building up a team. “They see growth and, as such, are adding bodies”, the source said.
Another source said the strategy of hiring more junior executives is more akin to hedge fund recruitment than other investment managers. He said: “Gillerman was a senior guy. They’ll want someone senior overseeing the junior guys in Europe. They generally don’t like to hire lots of seniors…but they’ll want the grey hair of Steve Orbuch to oversee them.”
OZRE’s first two real estate funds were “top quartile” performers. According to a note by The New Jersey Division of Investment (NJDOI) proposing a $100m investment in OZRE Fund IIII, its first fund, raised in 2005, is generating net returns of 15.5 percent IRR and a 1.5x equity multiple, while its second, 2010 fund, is generating net returns of 20.2 percent IRR and a 1.2x equity multiple.
NJDOI said the strategy for Fund III is to pursue opportunistic real estate investments via debt or equity across the capital structure. Investments are expected to be split approximately 50:50 between traditional real estate assets like multifamily housing, offices, hotels and retail properties, and non-traditional assets like leisure, distressed land and residential properties, debt and senior housing.
In Europe in the last 24 months the firm’s deals have included: a minority equity stake in the acquisition in January 2013 by Malaysian Employees Provident Fund of 12 Spire Healthcare hospitals, arranged by Moor Park Capital; an £80m mezzanine loan for Round Hill Capital’s acquisition of London student housing group Nido; and an investment in the class A notes in the Titan Europe 2007-1 CMBS that is secured on the Nursing Home Properties business, HC One which is about to be sold.
OZRE declined to comment.