Jacques Lebhar, LB-P
"We are relaunching a unique investment fund on the entire value chain of real estate industries"
LB-P relaunches the Euro Immo-Scope mutual fund, a collective investment in transferable securities (UCITS) fund which covers the entire value chain of real estate industries throughout the European Economic Area. Its president, Jacques Lebhar, outlines the strategy and the ambitions of this investment fund and discusses the focuses of development of his group which openly plays the international map.
Business Immo : LB-P relaunches a European-oriented fund. What are its specificities?
Jacques Lebhar : The Euro Immo-Scope UCITS fund is a fund whose main feature is to encompass the entire value chain of real estate industries by investing in listed securities belonging to the building materials sector, the construction industry, the infrastructures and more traditional real estate players, from real estate companies to developers and service providers. We based our approach on the principal that real estate and city development constitute a full economic ensemble, at the heart of technological change and representing between 15 and 18% of GDP in France according to the evaluations. This UCITS fund invests on the scale of the European Economic Area, not only in the Euro area. It is a unique fund in Europe that we have incubated for about ten years and turned into a resilient and agile vehicle in the face of the differentiated evolutions of sectoral cycles. Our investment strategy is based on a monthly analysis of macroeconomic components and geopolitical factors that can influence our markets and a first "top-down" sectoral filter, and "bottom-up" when it comes to the "Stock-picking “ values selection by our management team. Euro Immo-Scope fund is aimed at both institutional and private investors. It is eligible for the French share savings PEA and most likely outside the scope of the French new real property wealth tax IFI. Our ambition is to raise 200 M € on this vehicle.
BI : What are the other focuses of development for LB-P Asset Management?
JL : As to unlisted securities, the development of customized OPPCI real estate fund, including financial structuring, is of course a basic activity that mobilizes us in a recurring basis.
But in terms of development, we are also working on a new fund dedicated to the financing of real estate development. Our aim is to accompany the development of confirmed developers who, while retaining their capital independence, want to move from a local or regional logic to a supra-regional or even a national ambition by strengthening their own funds as regards development projects. These developers don’t find an adequate response nowadays in the classical proposals of banks that focus on large operators or in alternative funding as crowdfunding is akin to a mezzanine credit without flexibility. Our proposal is to take minority equity stakes of € 1 to 1.5 million in selected SPV, in order to speed up their development. With regard to national developers and large-scale transactions, we will take a pragmatic approach, on a case-by-case basis. Our ambition is to give the investors a perfect visibility of the selected projects.
BI : What are the broad guidelines of the other part of the LB-P group activity?
JL : We focus on two guidelines. On the one hand, companies' balance sheet financial engineering where we deploy a special expertise on mergers and acquisitions and financial restructuring, an offer of financial advisory with high value added, the structuring of complex real estate transactions and the search for funding. In this context, we are developing structured bond products for private real estate companies, wealth managers and family offices. They present themselves as an alternative to the classical bank funding that remains historically familiar. These services - our second strategic focus - we want to deploy it outside France. As real estate domestic players are finally developing an increasingly European approach, while most of their Anglo-Saxon and Asian counterparts adopt a global view of the real estate sector.
BI : In this world view of real estate investment, where does France stand?
JL : Since the presidential election, France has recovered an attractive image from international investors and it must be welcomed. However, this did not lead to a rush of investors on the country, just as the previous mandate had not caused a massive leakage of foreign capital. France continues to benefit from strong fundamentals: the beauty and quality of its real estate properties, its enhancement in the long run, the low cyclicality of its market, the level and the security of its legal system. It still suffers from the same weaknesses: a concentration of economic players and thus of real estate on the Parisian region to the detriment of the regional metropolises, and above all a tax system always in contradiction. The French new real property wealth tax IFI is the latest example. The refocusing of the French wealth tax ISF on real estate is in contradiction with the ambitions of energy transition which involves restructuring a significant part of the existing built areas, and remains unfair by its confiscatory rate and its duplication with the taxation of capital gains. It will be unmanageable if the tax services intend to actually ferret out real estate investment everywhere, including in the balance sheet of foreign companies. It is all the more a pity, and even damaging, as real estate is a foundation of solidarity between generations and a key element of the attractiveness of France.
Published in Business Immo
March 5, 2018
https://www.businessimmo.com/contents/95640/nous-relancons-un-fonds-d-investissement-unique-sur-toute-la-chaine-de-valeur-des-industries-immobilieres