Monday, October 4, 2010

Interview: Mr. Erwin Stouthamer, Principal, Composition Capital Partners,

In the 2009 PERE LP Survey, Composition Capital Partners BV is the only General Partner listed as particularly admired for its thorough work and transparent communication The company has an extensive network in Europe, Asia and the US, built up over a period of twelve years. The members have strong direct real estate experience and in addition to their network, bring a broad range of skills in deal structuring, due diligence and investment monitoring. The cultural diversity of the company not only provides it with local insights, but also helps us better appreciate and understand the cultural and behavioral aspects of the markets.
Mr. Erwin Stouthamer, Principal, Composition Capital Partners:

>>Composition Capital Partners is a real estate investment management company which was founded in 2005. Prior to establishing the company, our senior management had been investing in US, European and Asian real estate markets on behalf of a large Dutch pension fund for over a decade. We specialize exclusively in Fund of Funds real estate investment structures investing with local operators through joint ventures, club deals, secondary transactions and (smaller) funds. In this way, our investors can access a real estate portfolio which is diversified in terms of managers, strategies, real estate sectors and locations. Compositions Asia Fund I was the first Fund of Funds to be launched in Asia. Our company currently works with 20 institutional investors from Asia, Europe and the US.
We have chosen to operate as a private and independent boutique firm. Our company is owned by four principals and employs 17 people in Hong Kong and Amsterdam. We are proud to have an experienced international professional team dedicated to providing a high quality of service to meet investors needs. Composition was recognized in the Private Equity Real Estate Limited Partner Survey 2009 (PERE LP Survey 2009) for their thorough work and transparent communication
Composition values its relationships with its investors and investment partners. We believe in taking the time to understand our investors requirements & ambitions and in maintaining open relationships & dialogues. We have created a substantial network of potential investment partners through our active local presence and visibility in individual real estate markets. We again believe in taking the time to understand fully the ambitions and motivations of investment partners to ensure the needs of our investors are realized. Our company has held positions on the boards of various real estate industry bodies, including Inrev, the European counterpart of Anrev, the Asian private equity real estate industry platform.
>>Our investment strategy has always been to work with the best in class local partners in accessing the best real estate deals, with a focused mandate involving clearly identified investment, operation and divestment parameters and strategies, with suitable risk management in securing returns for our investors.
With our local teams and knowledge of the markets, we believe the markets in Asia and Europe offer diverse opportunities with different time horizons and risk exposures. In many markets access to debt has become harder for many players, which we see as a great opportunity. For example, we recently have invested into recapitalization strategies in Germany and Japan involving preferred equity positions in mezzanine type arrangements where capital structures are frozen. We also have invested in value-add opportunities in the UK and Hong Kong, involving refurbishment, repositioning and stabilization of assets to yielding products for core type buyers.
>>Our company was founded on over a decade of experience and an extensive network of personal contacts in international real estate investment markets. We capitalized on this initial solid base of experience and personal contacts to build a source of reliable managers and deals for our investors. We have always believed in accessing local platforms with strong teams, alignment, deal-sourcing and execution, so maintain close contact with the local real estate markets we invest in on behalf of our clients. We believe our proximity and understanding of local managers makes us better placed to select the quality managers on behalf of our investors.
Composition has been in the Fund of Funds market since this market's inception. Our sole activity since being founded has been management of Fund of Funds. We are one of the few independent managers with a dedicated and focused product in the market. Our Asia I fund, headed by Composition's Director, Bill Shaw in Hong Kong, was the first Asia real estate Fund of Funds on launch, in 2005. Our employees, representing 10 different nationalities, have a wealth of experience in real estate development, asset management, private equity, research & consulting, and institutional investment.
We are also unique in that we have taken the lead and seed investor role in several established local platforms in fund and joint venture structures. We are one of the earlier players working in direct partnerships with local players, taking a very active role in structuring platforms with our partners and also in working closely with them through to exit stages. We believe our partners appreciate our local knowledge and resources, where our input is respected and where we sit on the advisory boards of all of our investments.
>>Composition has been investing in Korea through our fund of funds platform since 2005. Prior to the establishment of Composition, various principals and employees had been actively involved in Korea in previous roles as early as 1998. We believe the long term fundamentals of the Korean economy and its real estate markets offer interesting opportunities for our investors. We already participate in a Korea-only fund vehicle and, in addition to other potential fund investments; we are currently considering joint ventures and co-investments in Korea. We are especially attracted to the value-add opportunities which involve the repositioning, refurbishment, and stabilization of both office and commercial assets that can yield an attractive return to our investors, and upon exit, to core/core-plus buyers.
In additional to our investment activities in the Korean real estate markets, Composition is exploring opportunities to provide Korean institutional investors access to both Asian and European markets as investors in our Fund of Funds.