The expanding world of cross-border Real Estate.

ID Management/ www.idmanagement.fr/ 42 avenue Lingenfeld/ 77200 Torcy

tel + 39 3881407769 / delama@idmanagement.fr

ID Management SASU
42 avenue Lingenfeld
77200 Torcy
France
Representative office
49 via Jacopo da Ponte
00197 Roma
Italy
+39 388 140 77 69
delama@idmanagement.fr
Roma 10/05/2015
ID Management/ www.idmanagement.fr/ 42 avenue Lingenfeld/ 77200 Torcy
tel + 39 3881407769 / delama@idmanagement.fr

International cross-border investment

1.

Facts:

Investors working in a foreign market usually take strategic decisions, which

lacks focus. Their local implementation is not as expected due to three main
reasons:

2.

Misunderstanding the local cultural specifications

Bad selection of the team.
Irregular dimension of the work force.

How to act?

The easiest way to avoid any cultural barrier is with the confidence of a local
economic agent incumbent in the market. Three ways appears to enter an
unknown market:
1. Via an entrance ticket with an establish MNC (multinational corporation)
asset company.
2. Implementing a local office (it demands 2 years of market education).
3. Via a local partnership.
Strategic decisions should be international while operational implementation must
be local.
In a particular market does not have necessarily to be any strategic group
behavior among investors with similar origin. The market does not necessarily
proposes a specific investment vehicle (offer) dedicated to investors with similar
origins (demand).
If a company finds problems in cross border investments either have they not
invested in understanding the local culture or they have not chosen the
appropriate way of entering the market1.
ID Management is a real estate Fund Management & Advisory company dedicated
to investors, tenants and developers wishing to operate with a pan european
strategy.
IDMs philosophy is to seek superior returns by creating value. We achieve this
through the execution of astute acquisition strategies and active asset
management in accordance with strict ethical principles.

1 CORRUPTION FROM A CROSS CULTURAL PERSPECTIVE. John Hooker in Vol. 16, Issue 3 of
Cross-Cultural Management: An International Journal (2009)

ID Management/ www.idmanagement.fr/ 42 avenue Lingenfeld/ 77200 Torcy

tel + 39 3881407769 / delama@idmanagement.fr

Our core business is to act as local operating partner to international and

domestic capital investing in the French real estate
IDM advises any company willing to invest in a foreign market to:

Base its cross border operations on a strong trust network, to understand

contextual rules and to use the correct contacts with efficiency.
Reproduce the trust system of the society.
Consider time understanding the context and trying to be understood as
an investment2.

3. The expanding world of cross-border Real Estate3.

Real estate capital is just beginning to flow cross-border on a regular basis.
Although transaction costs are often higher than domestic-to-domestic
transactions and international benchmarks can be elusive, the trend toward
greater cross-border movement of real estate capital is as unmistakable as the
growing volume of world trade.
What frameworks are useful for analyzing real estate opportunities in other
countries?
In recent years, most of the capital willing to move across borders into real estate
comes from eight to ten countries and is directed toward 20 to 25 countries. The
principal origin countries in 2002-2004 were Australia, Canada, Germany,
Middle-Eastern countries (including Israel and the principal oil-exporting Arab
states), the Netherlands, Singapore, the United Kingdom, and the United States4.
For decades, facilities leased and owned by MNCs (multinational corporations)
have pushed far ahead of dedicated real estate investment capital flows into
emerging markets. Even today, relatively few cross-border investors have
international real estate exposures that exceed 10 percent of their portfolios (by
value or square footage), whereas many MNCs do.
The most common approach to stock exchange listed real estate companies and
investment trusts is to focus on a single country.

THE SEVEN HABITS OF HIGHLY EFFECTIVE PEOPLE. Stephen R. Covey Free Press. Publication
date, 1989. Habit number 5: To think about how to understand firstly and later to be understood
is the extract of the respect to the others. The need that we have of being understood is one of
the most intense feelings of all the human beings. This habit is the key of the effective human
relations and it makes possible to come to type agreements to win / win.

The Expanding World of Cross-Border Real Estate, Jacques N. Gordon for the Zell/Lurie Real
Estate Center.

2014 Real Estate Transparency Index produced by Jones Lang LaSalle

ID Management/ www.idmanagement.fr/ 42 avenue Lingenfeld/ 77200 Torcy
tel + 39 3881407769 / delama@idmanagement.fr

The motivations and objectives of cross-border real estate investors vary greatly.
They basically can be put into one of two categories:

Return Enhancers (seeking premiums to a domestic market);

Risk Minimizers (seeking diversification away from limited or inefficiently
priced domestic markets).

The absence of private equity benchmarks with long time seriesonly five
countries have them: Australia, Canada, the Netherlands, the United Kingdom,
and the United Statescan be unsettling. The recent introduction of private
equity benchmarks in many other developed countries does not give some
investors the long-term analytical perspective they typically seek.

4.

Who should invest in cross-border real estate?

Cross-border real estate is not for every investor and those with short time
horizons will find the currency swings very annoying. The natural hedging ability
of a multi-country portfolio held over time or the ability to keep track of
international real estate exposures as part of a currency overlay program may be
beyond the patience of individual investors, or those who measure their success
quarter by quarter, rather than over multi-year periods.
Taking their cue from the work of transaction cost or institutional economics,
Zonis and the co-authors of The Kimchi Matters, describe how important it is to
understand the rules of the game when investing in other countries.5
Those investors unwilling or unable to take the time to figure out these rules,
and the stability (or lack thereof) of the institutions that enforce these rules, face
huge risks.
Whether an investor puts return enhancement or risk reduction as the primary
goal of their cross-border real estate program, the principle of setting an
appropriate risk premium creates an important investment discipline. This
discipline helps ensure that investors are compensated for transparency and
structural risks (along- side market and asset-specific risks) as they move into
unfamiliar markets.

5.

Methodology.

Some sophisticated investment vehicles are present in the most developed Real
Estate markets (USA, UK, France and Germany) but are mainly focused on
institutional investors or small investors. They do not easily allow access to Real
Estate cross border independent investment to foreign family offices and UltraHNWI6.

THE KIMCHI MATTERS: Global Business and Local Politics in a Crisis-Driven World1 mars 2009.
Marvin Zonis, Dan Lefkovitz, Sam Wilkin

Stands for an Ultra-high-net-worth individual who has over US$30 million in financial wealth

ID Management/ www.idmanagement.fr/ 42 avenue Lingenfeld/ 77200 Torcy
tel + 39 3881407769 / delama@idmanagement.fr

A dedicated vehicle for foreign family offices and Ultra-HNWI with pan
European investment strategy must be defined.
We propose to study a chosen local European market (its investment
opportunities and possibilities) together with a scope of potential foreign investors
(from the US, Spanish, Scandinavian or Italian market) to build an exportable
Real Estate international investment vehicle dedicated to foreign family offices
and Ultra-HNWI.
To answer investors cross-border real estate objectives successfully IDM
proposes to implement the following three-steps strategy:
1. Presentation of investors strategy to the city of Paris.
2. Presentation of the group and investment objectives to the private
decissions-makers of the citys Real Estate Market.
3. Identification and analyse of oportunities with the investors team.
Once these stages are conducted, IDM offers you an accompaniment service in
line with best market practices regarding:

Purchase negotiation of the selected project(s) in your best interest.

Project management support to ensure the best realization of your project
and its confirmity with investors demands.
Continued communication among stakeholders.

IDMs team has all the skills and competences asked to successfully carry out this
mission. ID REIM has a large knowledge and experience in the French, Spanish,
Italian and German market.

Ivan del Ama

ID Management
Roma, May 10th 2015.

ID Management/ www.idmanagement.fr/ 42 avenue Lingenfeld/ 77200 Torcy

tel + 39 3881407769 / delama@idmanagement.fr

ID Management/ www.idmanagement.fr/ 42 avenue Lingenfeld/ 77200 Torcy

tel + 39 3881407769 / delama@idmanagement.fr

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