EUROPE NEWS: Take ‘em to the Tower

From large private equity shops and limited partners to boutique advisors and workout specialists, the Hilton Tower Bridge in London was the hub for European private equity real estate last month. PERE Magazine July,August 2011 issue.

London’s Tower Bridge was hailed an icon when it was built in 1894, so it was fitting that the biggest PERE Forum ever – with just under 300 delegates – should take place next to it. It also was fitting that The Blackstone Group opened the two-day conference at the Hilton Tower Bridge Hotel. After all, Blackstone acquired Hilton through a $26 billion leveraged buyout in 2007.

Currently, however, Blackstone’s pre-eminent concern is raising its next mega fund and figuring how to spend it in places like Europe, where deal volume is grossly lagging the US (see Wall of maturity, p. 16). Indeed, that was a theme that ran throughout the event.

Still, a number of fund managers have been finding ‘one-off’ deals. Ben Habib, chief executive of First Property Group, wowed delegates with details of what appears to be a knockout deal in Poland during a debate on Central and Eastern Europe and emerging markets. In more established markets, new real estate entrant Kohlberg Kravis & Roberts said it was examining four deals in Europe (see Stewards of capital, opposite page).

Fundraising was the other main theme of the Forum, and participants could not deny that it has been tough to raise equity. To paraphrase Sasha Silver, head of Europe at Credit Suisse’s Private Real Estate Fund Group, most investors are interested in a tightly-focused product from firms with strong track records.

Apart from deals and fundraising, there are other challenges to navigate, with regulation being chief among them. In an hour-long discussion, experts on the AIFM directive, EMIR and carry limitations set out 10 must-do items for every fund manager operating in Europe. Among the recommendations: performing an impact study and technical diagnosis of compliance with the myriad of new requirements and beginning legal and tax transformations of operating and management platform by the end of the year.

Ultimately, the take-away message from the Forum was “talk a lot to LPs”, “retain the best team possible” and have feet on the ground in the larger markets. Piece of cake, right?