BlueRock: Lasting Value — in Terms of Investments and Firm’s Policies and Management

Boutique real estate investment house BlueRock was founded in 2010 with just a handful of assets; today it has more than €1.2bn in AUM.

BlueRock is located in the heart of Zurich, and caters to the needs of high-net-worth individuals, family offices and institutional clients. Besides providing access to off-market properties, it accompanies investors throughout the process — from the very start.
Investment is possible across two funds and several joint-venture vehicles on a deal-by-deal basis. The company pursues commercial and residential strategies within Europe, with a strong focus on German real estate markets.

Over the past few years, European real estate markets have seen phenomenal growth and rates of return. The steady uplift of valuations led the company to develop concise investment guidelines for its clientele. A strong focus is placed on maintaining the excellent relationships it has with all stakeholders in the value chain.

BlueRock co-founder and managing partner Ronny Pifko believes that a key element in the company’s success has been collaboration with local experts in all transactions. It provides access to some unique properties and assures the ready identification of hidden values and potential issues.

“The steady uplift of valuations led the company to develop concise investment guidelines for its clientele. A strong focus is placed on maintaining the excellent relationships it has with all stakeholders in the value chain.”

The company focuses on A- and B-locations in German markets, offering a formidable risk-return ratio for investors. Each investment undergoes a thorough due-diligence process, assuring value-add potential and security. Emphasis is also placed on good micro-locations, along with purchasing multiples that reasonably allow for future appreciation. BlueRock faces no liquidity pressure and processes just a few select investments each year. This has allowed some outstanding returns and attracted a steady client base.

Digitalisation complements BlueRock’s firm investment guidelines, and remains a key focus for the company’s future. In 2020, BlueRock group has invested in new software to build on strong client relationships and reporting processes. In the real estate market, where many investments are highly illiquid, the fast and reliable provision of information is something often overlooked. BlueRock group emphasises digital solutions that allow for the complete integration of all its investments into existing portfolios of family offices and banks. This allows for the investor or wealth manager to keeping a clear overview of investments and monitor any changes — while preventing outflows of assets.

Feedback has been consistently positive, and Pifko has seen confirmation of his belief that keeping up with the latest digital developments is crucial. Having grown rapidly, and organically, the company is increasing its focus to provide fresh investment solutions across the Berlin residential property market. The company has a long track record here, covering more than €200m in deal volume.

Legislation — such as the newly implemented rent cap and the Milieu Schutz protection — have disrupted the investment environment. Interesting opportunities for the mid-long term have arisen, with new developments at a low and a consistent demand for housing. The company is set to acquire assets below market value, unlocking potential value in conversions, such as the building out an attic floor.

Again, emphasis is on selecting respected local third-service providers with excellent knowledge of the market. With current property valuations still at pre-COVID levels, the company focuses on enhancing the value-chain. The strategy is projected to earn an internal rate of return of 20-25 percent at central Berlin locations.

BlueRock Group has surged ahead, and shows no sign of slowing down. Recent investments in technology and human capital — BlueRock recently hired Lukas Müller as director of business development — have set the company firmly on track for future growth.

The investment platform and current set up allow for a confident glimpse into the future, despite a challenging economic environment.