BNY Mellon Closes Real Estate Fund Administration Deal With Deutsche AWM

BNY Mellon has finalized an agreement announced last July with Deutsche Asset & Wealth Management (Deutsche AWM), whereby Deutsche AWM will outsource real estate and infrastructure fund finance, fund accounting, asset management accounting, and client and financial reporting functions to BNY Mellon.
By Jake Safane(2147484770)
BNY Mellon has finalized an agreement announced last July with Deutsche Asset & Wealth Management (Deutsche AWM), whereby Deutsche AWM will outsource real estate and infrastructure fund finance, fund accounting, asset management accounting, and client and financial reporting functions to BNY Mellon.

As part of the deal, in which BNY Mellon will administer over $46 billion, Deutsche AWM will also transfer approximately 80 employees to BNY Mellon, where they will become full-time employees of BNY Mellon’s Alternative Investment Services business. The staff transfers will primarily take place in Chicago, London and Frankfurt.

This deal will allow Deutsche AWM, the sixth largest real estate manager in the world, to focus more on the investment side of the business, while BNY Mellon will focus on the asset servicing side.

BNY Mellon also sees this deal as a jumping off point for real estate fund administration, as the firm has been in a pre-marketing stage, reaching out to between 40-50 potential clients and being approached by about 20 others.

First, though, BNY Mellon will focus on onboarding the assets for the Deutsche AWM deal, and after that’s settled in, the firm will look to take on more clients in the U.S., followed by Europe and Asia, says Samir Pandiri, executive vice president and CEO of Asset Servicing at BNY Mellon.

In order to service real estate funds, which can be highly technical, BNY Mellon has also added a new real estate accounting system from Yardi, a vendor that specializes in this industry.

Overall, BNY Mellon sees a lot of growth potential in this sector. Pandiri compares the growth of the real estate fund market (around $2 trillion today) to that of hedge funds, and he sees trends such as real estate funds becoming more institutionalized like hedge funds.

“For large pension funds and other asset owners, the trend into private equity and real estate is strong, and we don’t see that abating over the next 5-10 years,” says Pandiri. “The other important fact is that if you look at most real estate transactions, 85% of them are serviced in-house by different applications, on spreadsheets, on paper, or whatnot… Real estate today is clearly big from an investment perspective, but from an outsourcing perspective, it’s clearly underutilized, so that’s the trend we’re hoping to capitalize on.”

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