More opportunity than risk: Barings real estate boss on his new venture

The former head of real estate in Germany for investment manager Barings is eying distressed deals, international investors and fresh fund launches after embarking on a new venture. Christoph Wittkop and three former Barings Germany colleagues will launch Sonar Real Estate in December, focused on investment, asset management and development. The company will have seed assets comprising non-core, third-party investment and advisory mandates from Barings, and the team expects an initial portfolio of €1.2bn in assets under management. Barings decided to shift its focus away from its third-party mandates early this year, Wittkop told EG in an interview from his family lake house an hour outside of Hamburg, where he was taking a holiday before the launch of Sonar. “We discussed a couple of ideas as to how we could execute this, and the only one I said I’m behind would be a spin-off together with a small group of employees – that’s when the idea started,” he added. Wittkop, who had worked at Barings since 2014, when it bought his Pamera Asset Management, said the split had been achieved “on good terms”. He will be replaced as Germany country head at Barings by Sascha Becker, currently the group’s head for Frankfurt. With 14 colleagues set to move to Sonar from Barings, the new company is close to naming another managing partner to lead a new Frankfurt office. Sonar has taken Barings’ corporate offices in Dusseldorf, Berlin and Hamburg, the latter its headquarters. Barings has kept its Frankfurt and Munich offices. Sonar’s early transactions will see it act for individual clients – Wittkop said he and the team are considering the launch of pooled funds, although “not on day one”. Initial portfolio Most of the assets in the initial portfolio are offices, but Wittkop added that the company will develop a keen focus on logistics as well. Clients will include domestic investors as well as international partners including Tristan Capital Partners, which worked with Barings on several investments. “The group of clients is a mix of German institutional clients, where we manage core and value-add accounts – we want to build out this relationship with German institutions, which we did not do enough in the last couple of years, to be honest,” Wittkop said. “The second group is a mix of non-German investors, mainly UK-based private equity groups but also other foreign investors, who instruct us with existing portfolios or assets to manage them, or acquire them together.” The right time Launching a company in a crisis is daunting at the same time as exciting, but Wittkop said he and the Sonar team agreed that now is “the right time to do this”. “The opportunities will hopefully be more than the risks,” he said. “Nobody knows exactly when the time is right, but from 2021 onwards there is probably a window of opportunity for two or three years when you can start seeing more interesting, distressed situations.” But he added a note of caution and emphasised that Sonar will not simply look to capitalise on riskier bets. “We won’t rely only on this kind of situation,” he said. “That’s why we have a more passive group of German investors who are less value-add-driven and more core, core-plus-driven, to stabilise the income stream.” To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette