Following its €550m acquisition of the Westin Paris-Vendome last year, its second luxury Paris hotel buy, private equity firm Henderson Park is looking for more across Europe, say founder Nick Weber and MD Christophe Neubier. And hotels are not the only assets on the radar.
In an exclusive interview with Business Immo, the executives said Henderson Park targets acquisitions of around $1bn annually and also focuses on office and housing - even if hotels have been the most high-profile acquisitions so far. Its purchase of Paris's iconic Le Méridien Étoile in November 2016 was followed last December by the equally emblematic Westin Paris-Vendôme for which it reportedly paid Singapore's GIC sovereign wealth fund around €550m.
"France has been frankly cheap for a while, and until last year several investors were under-pricing France, especially Paris," Weber said. "The rugby World Cup and the Olympics are coming soon and, with a pro-business president, it seems like a good time to invest."
Founded in September 2016 by Weber, a former head of Europe at Mount Kellett and Goldman Sachs executive, Henderson Park began operations with a $500m capital raise from US wealth manager Stone Point Capital, Kuwait Investment Authority and the Saudi-based Wafra Investment Advisory Group. Since then it has added another $1.8bn (€1.5bn) in equity from investors, allowing the group to invest in assets worth some $2.75bn so far.
"We are looking to acquire large institutional assets in UK and European capitals and cities, usually requiring a new owner, refinancing or significant investment," Weber told BI journalist
Luc-Etienne Rouillard Lafond in a telephone interview. "We do not want to buy the most glittering buildings but rather look for assets that can be improved over time."
But he said the value-added label does not necessarily correspond to the Henderson Park strategy: "Certainly, we aim for opportunistic and value-added returns but I would say we are looking for core assets that have deteriorated, in locations with high return potential."
Managing Director Christophe Kuhbier, brought in early last year from London and Paris-based opportunity manager TwentyTwo Real Estate, told BI: "Acquiring real estate assets that generate rents is expensive today and does not provide the level of profitability we are aiming for. This is why we are interested in situations that require a more active role, both in the setting up of the operation and in asset management."
In its 16-month existence, Henderson Park has so far mainly sought assets valued at between €150m and €500m, either single properties or portfolios, the executives said. It frequently finances these with a partner by putting in €50m to €150m of equity. Last March, in partnership with rented housing specialist Greystar Real Estate for example, it acquired a London portfolio of 172 housing units for around €160m. The two followed this this January with another PRS portfolio in Croydon. In office, Henderson Park entered Spain last autumn with the acquisition of the 18,000 sqm Los Cubos Madrid property which it plans to renovate. Prior acquisitions in hotels include the purchase of the 5-star Ledra hotel in Athens in June 2016 and, three months later, the £500m acquisition of the London and Birmingham Hilton Metropole hotels.
"Our focus so far has been on office, housing and hospitality in London, Paris and Madrid," Weber told BI. "We also spend time in Germany and Italy but have not found the right opportunity for the moment." The investment group has taken a long-term approach and has not set any target for volume of investment and asset turnover. But he added: "We intend to acquire more than €1bn in assets per year, even if this is not an absolute rule." Generally the group holds assets for four to seven years, "but we could easily hold them for 10 years or more," he added.
The group remains enthusiastic about French real estate and its appetite for Paris is unlikely to focus solely on hotels. Weber said: "We already have a hotel complex and a residential building there, and last year we looked at opportunities in the office and commerce sectors that did not materialise. I would not be surprised if we bought major Parisian assets over the next two years."