BNY Mellon to Manage Deutsche RE Funds

NEW YORK CITY—Deutsche Asset & Wealth Management will outsource administration of its real estate and infrastructure funds to BNY Mellon under an agreement the two companies announced Monday. The deal, for which terms were not disclosed, covers approximately $46.3 billion in assets under administration globally.

The agreement covers the finance, fund accounting, asset management accounting, and client and financial reporting functions for funds under the aegis of Deutsche AWM's Alternative Real Assets. Business. It vaults New York City-based BNY Mellon into the ranks of the largest real estate fund administrators in the market. As many as 80 members of Deutsche AWM's fund finance team are expected to transfer to BNY Mellon and become part of its Alternative Investment Services organization.

When the two companies began exclusive negotiations on an agreement for what was then $47.6 billion in AUA this past July, Forbes reported that although one of the world's largest administrators of alternative assets, BNY Mellon had a relatively small share of the real estate fund management business. Further, Forbes noted that outsourcing made sense from the standpoint of Frankfurt-based Deutsche AWM, the wealth management and private banking arm of Deutsche Bank.

The funds being outsourced to BNY represent “one-third of Deutsche Bank's total alternative assets under management and a little more than 60% of its total real estate related alternative investments,” Forbes reported. “From the looks of it, Deutsche Bank appears to be responding to its clients' demands for better services from its real estate funds—something that is best achieved by outsourcing the day-to-day functions to a full-service fund administrator.”

Accordingly, BNY Mellon's Samir Pandiri says “the market for real estate asset servicing is posied for solid growth” as investors shift to other alternative investors. “Investment managers are turning to asset servicers like us who are better positioned to make the necessary investments in technology and people to deliver a higher level of service.” The agreement with Deutsche AWM will enable BNY Mellon  to “develop a more integrated accounting and client reporting solution,” adds Pandiri, EVP and CEO of asset servicing.