Meyer Bergman, the retail property investor established in 2005, is on the brink of achieving a key milestone.
If all goes well, it is expected to make a number of announcements before the end of the year marking the culmination of many months of hard work accumulating capital and sourcing investments across Europe. This would see Meyer Bergman truly arrive as a private equity real estate firm – no mean feat given the uncertain climate for commingled funds currently.
Ahead of that, PERE met with Markus Meijer, the firm’s 39-year-old co-founder and chief executive, in its London headquarters to hear more about the man at the helm, the deals to date and what the ultimate plan is for the platform.
Looking tanned and pumped, Meijer fits easily into that bracket of young international private equity real estate jet-setters that have enjoyed a world-class education and cross-border deal experience.
Family dynasty
Born in Holland into a real estate dynasty, he studied law but couldn’t resist the gravitational pull of property so he followed his grandfather and father into the business. Markus Meijer Markus Meijer
His grandfather built hospitals and residential complexes in the 1950s, 60s and 70s, while his father eventually struck out on his own, building MAB Group into one of the most successful of European retail development powerhouses with a €7 billion pipeline by 2003.
I thought it would be interesting and may be self-fulfilling to do something completely different but eventually I decided I might as well stay in the same industry and use my background as a springboard for something bigger,
Meijer recalls the heady days when MAB was a conglomerate with a car dealership, construction company, insurance firm, and even a yacht brokerage. It was split up in 1982 during the big European economic downturn.
The next seismic step came in 2004 when most of MAB was sold to Dutch property company, ABN AMRO Bouwfonds. MAB’s pipeline had become so big that it had been exploring ways of bringing in third party capital, while Ton Meijer was also heading towards the end of his career building the company.
It was then – in 2005 – that Mssrs. Meijer Jr. and Sr. co-founded Meyer Bergman to further their plans to create an investment management business.
Though Markus Meijer studied law he never seriously considered it as a career.
“I thought it would be interesting and may be self-fulfilling to do something completely different but eventually I decided I might as well stay in the same industry and use my background as a springboard for something bigger,” he explained.
He interned at developer Hines in Chicago, thanks to his father’s business connection with legendary developer, Gerald Hines, and joined the company to progress deals in Europe for the firm’s emerging markets fund. That was the beginning of his property career in Europe that next took in a three-year spell at Goldman Sachs’ Whitehall Funds working first under Richard Georgi, then Edward Siskind and Rich Powers.
Next he took a year out to complete an MBA at INSEAD in France, before joining his father at MAB as chief financial officer where he prepped the business for its ultimate sale to Bouwfonds.
After creating Meyer Bergman, most of 2005 and 2006 was spent progressing developments left in the business such as a hotel in Berlin, an office scheme in Luxembourg, an inner city development in Frankfurt, a regeneration scheme in Amsterdam and a shopping project in Paris.
My father expresses his view on every transaction so we never jump the deal on him.
It was towards the end of 2006, though, that the firm began to progress plans to raise a fund. In 2007, the company split, leaving the assets under the control of his father and the management company under Markus Meijer’s control. His twin brother left to focus on building a development business in Belgium and Luxembourg.
Today, Markus Meijer is in charge of Meyer Bergman though his father is chairman and gets to see all deals as part of the investment committee.
Said Meijer: “My father expresses his view on every transaction so we never jump the deal on him. It works really well because he has so much experience. He has seen almost everything that can go right or wrong in development, plus he has a very strong affinity with architecture, design and retail mix.”
Though father and son share the desire to be “international”, there are clearly differences between them.
“I probably have a more analytical skill set for managing risk, though he has that through experience,” he noted.
Part of that analytical ability has come through his law degree, MBA and cross-border deal experience.
Aladdin's cave
The team at Meyer Bergman he leads is lean, mean and most notably young.
There are 15 people in London, the oldest of whom is just 42.
It has stuck to its formula of investing in retail property, essentially the strategy boiling down to acquiring extremely well located shopping centres.
“We like assets with high footfall,” said Meijer. “It doesn’t matter whether it needs work, but any sizeable centre needs seven million-plus footfall a year.”
The first deal it did was in April 2008 when it bought the 9,862-square-metre Aladdin Shopping Centre in Kiev. The centre enjoys high footfall being on top of a metro station with very little competition.
The Ukraine is strongly linked to the price of steel and agricultural products, so the present boom in food prices is helping the asset. Though the strengthening of GDP takes time to filter down to consumers, Meyer Bergman has seen 7 percent growth in footfall in the centre over the last year. It has also gone from 95 percent to 100 percent occupancy.
After the Ukraine deal, Meyer Bergman went quiet on the transaction trail, but in 2010 it suddenly reignited with two deals in quick succession in the UK.
To invest we have to feel comfortable with the economic prospects of a country, not just the asset.
In March it acquired a 50 percent stake in the 62,000-square-metre Bentall Centre in Kingston-upon-Thames, southwest London, which attracts 14 million visitors per year. Then in June it bought the 27,000-square-metre Exchange shopping centre in Ilford close to the 2012 London Olympics site in Stratford, East London. Both assets were bought from owners which had been under pressure to create liquidity.
Meijer says the firm originally expected to put around 20 percent of capital into the UK and the rest in Western and Central Europe, but the figure is probably going to be closer to 30 percent to 40 percent, he explained.
The firm has two more UK deals in the pipeline.
“To invest we have to feel comfortable with the economic prospects of a country, not just the asset. We like the UK where the market bottomed out quicker than others, and it has top quality product. The UK is providing us with a lot of deal flow to buy absolute core assets,” he says.
Continental drive
But it is also buying in mainland Europe.
At press time, the firm was expected to reveal a development deal in Italy where shopping centres performed well through the economic crisis. Poland could present the next asset on the mainland and further deals could materialise in due course in other countries.
In fact, the pipeline suggests that Meyer Bergman’s capital could be substantially committed by the end of the year, which could lead to greater use of co-investment structures.
Speaking generally of the fundraising climate, he says: “It is difficult because fear is still very much in the air among investors,” he says. “I think people feel very comfortable with their domestic markets but not so much with external markets.”
He makes the point that while the BRICs are lorded for their growth stories, less attention is paid to the lack of transparency and downside risk.
“I think Western Europe is getting unfairly penalised by it. In a way, you are a contrarian investor if you invest in Western Europe,” he argues.
His point is that one can buy assets now at yields that one couldn’t for the last 15 to 20 years. “I think that is a very compelling story in a market that provides so much downside protection compared to markets like China.”
But he knows the market always goes in cycles – including demand to go direct versus indirect – and that investors will come back.
Ultimately having a healthy pipeline is a nice problem to have.
No style drift
Says Meijer: “Some people ask us if we would invest in assets other than retail. We will focus on retail but we might want to get bigger exposure to non EU markets – they could be European or somewhere else.”
He added: “We would rather become the best retail real estate fund than to try to become another diversified real estate fund.”
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