Corum Asset Management, a European firm with over €8 billion in assets under management, is entering the U.S. market with a dedicated SCPI, a French fund structure similar to a REIT.
"Why the United States?" With a wry smile, Frédéric Puzin, Corum's founder, preempts a legitimate question when presenting his new vehicle, Corum USA. "You're going to tell me it's a crazy idea, another marketing ploy by these SCPI managers, whose imagination knows no bounds..." laughs the founding chairman of the Corum Group, driven by a desire to "align (his company's) interests with those of (his) customers."
Across the Atlantic, this challenge seems achievable. He goes on to list the advantages of this country, the "leading international power," with 26% of the world's GDP, but also "the largest real estate market in the world" - "1.6 times the size of the European market," he insists.
"Real estate in the United States may be suffering, but the fundamentals are robust," asserts Philippe Cervesi, President of Corum Asset Management, who sees similarities with the UK market, which is "quite favorable to investors in general."
He explains: "We've often told you that we're looking for depressed, low-cycle markets, where there are few investors and little competition. In this sense, targeting the most volatile markets seems logical. In the UK, as in the US, there's a different culture when it comes to accepting losses..."
Corum believes that distressed markets offer opportunities, pointing to the halving of the number of transactions in the US by 2023 and higher interest rates than in Europe. The same applies to prime yields: 6.7% for offices in the fourth quarter of 2023, 6.4% for retail and 5.4% in the industrial-logistics segment. "The U.S. market corrects much faster," says Philippe Cervesi. "Sellers are pragmatic and able to take their losses. When you come in and have cash to offer, you're in a strong position." Triple-net leases, which are also "investor-friendly" - "the tenant is responsible for all work" - and "market transparency" also weighed in the balance.
Hence the official launch of Corum USA today, "at the right time, it seems to me," states Frédéric Puzin, guided by the diversification of his products. "The United States offers us a form of counter-cyclical protection against European risk."
A first acquisition in Manhattan
No sooner launched than active. At the time of presenting this SCPI, for which the subscription price has been set at €200, with a ten-year IRR target of 4.5% and an identical annual yield target, Corum is on the verge of signing its first acquisition across the Atlantic. And not just anywhere: in Manhattan, at the intersection of Broadway and 103rd Street; a 1,039-square-meter pied-à-terre property acquired from a developer for $17 million and a 7% yield within The Rockwell complex; premises also occupied by CVS Pharmacy, with an ongoing lease for just over 15 years.
"Other Corum playgrounds in the U.S.? We have no limits," replies Philippe Cervesi, who is targeting all asset classes except residential. "The investment window will certainly be longer than in Europe. It's up to us to make the most of it."
To do this, the management company will be relying on a local team currently being set up, which will be "attentive" to changes in the dollar, likely to cause the value of the real estate assets and the rents received to rise or fall.
"If our inflows are regular, we'll be able to invest in different cycles, which will enable us to smooth out the dollar rate, even if there will be certain shocks to absorb," sums up Frédéric Puzin, who does not rule out a "one-off return to the euro," up to a maximum of 10%.