What is a Club Deal and why invest in Club Deals now?

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Today, the term is increasingly used in the context of real estate investing, where a small number of investors come together to finance or acquire a real estate project.  

 

In Switzerland, the term   is also known as "consortium". 

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These investors are mostly wealthy private investors, family offices as well as asset managers and shareholders. 

 

"Club deals" are now a popular form of investment and are becoming increasingly popular worldwide.. 

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For most family offices, real estate plays an important role in the investment portfolio. 

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The challenge here is usually to obtain attractive properties in a highly competitive market. 

 

"Club deals" solve this problem because they enable investments that investors alone could not implement, for example due to a lack of access, know-how or financial resources. 

 

The reason for this lies in the special structure of Club Deals: A separate investment company is usually established for each property. 

 

Their purpose is to acquire, develop, hold and dispose of the appropriate property at a convenient time. 

 

 

The advantages of this structure are obvious: Investors benefit from greater transparency, a direct say and better opportunities to influence and obtain information. 

 

Since their number in a club deal remains manageable and the performance interests are usually concurrent, the exit process is also uncomplicated.

 

What makes a “Club Deal” successful? 

 

Experienced initiators of a club deal make sure that the group of investors is as homogeneous as possible. 

 

On the other hand, the way in which acquisition, holding, development and sale of the property are structured is crucial for the future success of a club deal. 

A "club deal" with a predictable exit structure is recommended. 

 

How long is the investment horizon? 

 

Generally speaking, family offices often aim for the highest possible internal rate of return (IRR). 

 

This interest then also influences the terms of the club deals in the various risk classes. Depending on the investment, the term can usually be between three and ten years. 

 

Depending on the size of the family office, the scope of investment is usually between CHF 1 and 10 million per investment.

 

Which specific target markets and trends are particularly attractive for Club Deals?

 

The family office likes to invest in markets that face different challenges, so the USA, Great Britain and Germany and of course our Switzerland remain the most attractive target markets for real estate investors. 

 

The figures also show this: For example, the share of investments in Europe has reached new record highs, but the USA remains the clear global number one in terms of inflows of funds. 

 

In addition to institutional investors, family offices were also a major driver of this development: In the past decade, family offices – mind you in terms of the number of transactions – completed most of their investments in the real estate sector.

 

The trend will also continue in 2023, in which the investments will also be checked for sustainability criteria.

 

The fees of a "club deal" are not comparable to a cost structure for a real estate fund. 

 

The interest of a "club deal" aligns its cost structure with the goals of its investors, who usually aim for the most attractive possible sales proceeds  (IRR). 

 

This means that "club deals" usually do not have high ongoing asset management fees or upfront fees as is known from real estate funds. 

 

Accordingly, most club deals provide for reduced upfront fees and low management fees, but instead provide for so-called "waterfall structures" from which the initiator benefits from an IRR agreed in advance with the club investors.

 

 

To what extent do private investors have access to Club Deals?

 

"Club deals" have become increasingly popular in the recent past and have increased significantly in the last five years. 

 

For example, in 2021, according to a study by PWC 

around 33% of all transactions supported by family offices.

 

The high demand for club deals is driven by several factors: On the one hand, the capital can be spread over several real estate investments, thus contributing to diversification and risk minimization in one's own portfolio.  

 

On the other hand, current global political and economic developments play a major role in investment decisions. 

 

 

Current "Club Deals" with our globally respected, professional and competent partners.

 

USA 

Chicago

existing Hospitality

NET IRR: 17.4%

Exit: 2025

Mindest Invest: 350'000.- CHF / Euro.

 

 

MONTENEGRO 

New construction project 

Construction of 150 luxury apartments 

Total volume around 78 million euros 

Exit: 2026

IRR: at least 15-20% / y

min. Investment: 1 Mio.  Euros

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My primary goal is to broker investments that offer security and the chance of a sustainable return in your portfolio. I am looking forward to contact me.