From private equity lawyer to real estate investment pro

Former Kirkland and Ellis partner Raymond McKeeve speaks to PERE about joining the property investment firm of entrepreneur Robert Tchenguiz.

Raymond McKeeve is not the first private equity lawyer to transfer to a private equity firm or a family office. However when he left Kirkland and Ellis at the end of March, it was widely seen as a blow to the law firm.

The private equity “star” had been charged by Kirkland to build its private equity practice, with McKeeve acting for clients including Apax Partners and Robert Tchenguiz. Now though the lawyer has moved out of the world of law after being tapped by Tchenguiz's private real estate investment firm, R20.

“I worked with R20 very closely for six or seven years,” McKeeve told PERE. “We were already operating as a fully integrated team as I did with most of my clients. It has been a natural move.”

McKeeve acted for Tchenguiz in the £431 million (€546 million; $860 million) acquisition of Odeon cinemas while he was at Linklaters. In that case Tchenguiz invested alongside German investment bank WestLB. Following a move to Kirkland and Ellis, he then advised Tchenguiz on the £180 million joint acquisition of Menzies Hotel Group. R20 invested in the four-star chain alongside property firm aAIM. He has also acted on the take-private of Somerfield, the supermarket chain, The Globe Pub Company, as well as Retail and Licensed Properties. In addition, he is open enough to say he worked on many deals that were “aborted.”

McKeeve says there are still opportunities for private investment firms, despite the current difficulties in accessing debt. “The traditional buyout market is still extremely stagnant. It will be a while before it comes back. There is a wall of capital chasing opportunities, but those opportunities have slightly changed.”

Specific examples include the Mitchells and Butlers partnership opportunity, he said. “I think you will see more of that because [such transactions] provide a sensible source of capital for UK public companies and it is a sensible way for private equity firms to get equity deployed in large chunks.”

McKeeve refers to R20's attempt to strike a £4.5 billion deal with UK pub group Mitchells and Butlers that would have seen the pub company form a property joint venture with its largest shareholder.

The JV failed last year, costing Mitchells and Butlers nearly £400 million owing to hedging positions. The failure prompted a strategic review of the company. Last month, the 2,000-outlet strong group said it would convert into a real estate investment trust (REIT) as soon as market conditions were appropriate. It also revealed it had appointed Tim Smalley and Aaron Brown from R20 as non-executive directors.

Invesco hires German lawyer
Invesco Real Estate has made a hire in Germany to assist in cross-border investment and reporting activities. Alexander Taft has been appointed head of investment structuring, having agreed to leave German law firm CMS Hasche Sigle where he was a partner. Taft will be responsible for further professionalizing the business by co-ordinating fund management, transactions and fund accounting functions. He will work alongside Ute Geipel-Faber, head of client relations, and Doris Schumacher, head of the Munich office and head of fund management in Europe. Invesco Real Estate has five offices in Europe as well as offices in the US and Asia, and manages €21.4 billion ($33 billion) of property assets, €7.7bn of which is in Europe.

Brush takes up non-exec role at Pirelli
David Brush, the former head of Europe at RREEF Alternative Investments and global head of opportunity funds, has taken up an independent directorship at the real estate arm of Italian tyre maker, Pirelli. Brush, who retired from RREEF earlier this year after 20 years of service, was voted onto the board by shareholders at Pirelli Real Estate's annual meeting on April 14, according to a statement. During his tenure, RREEF and Pirelli forged close links in Europe where they have invested in a number of deals together. Two of the largest joint investments were the €1.6 billion ($2.2 billion) acquisition of German residential property company BauBeCon from Cerberus Capital Management in July last year and more recently the acquisition of a 49 percent stake in a portfolio of German department stores from Germany's Arcandor Group.

IPD number-cruncher to join CBRE
Former IPD chief economist Sabina Kalyan is joining Richard Ellis as European head of strategy, a newly created position at the firm. She will be based in London. Kalyan is tasked with creating a research platform to support the firm's European investments, from real estate securities and fund of funds to its direct core, value-added and opportunistic strategies. She will also be responsible for developing CBRE Investors' views on the outlook for the European economy, financial markets and national property markets. Prior to joining IPD, Kalyan was an economist at UK research firm, Capital Economics.

ProLogis appoints new European chief
ProLogis's European arm has appointed Gordon Keiser as chief executive officer, with effect from June 1, replacing Robert Watson, who is returning to the US where he is set to become chief sustainability officer at the industrial developer. Under Watson's tenure ProLogis European Properties (PEP) developed from being a private fund to becoming a company listed on the Euronext exchange in Amsterdam in 2006. Keiser is being elevated from his position as senior vice president and treasurer at ProLogis, the management company of ProLogis European Properties. The latter is a significant investor in ProLogis European Properties Fund II (PEPF), the private equity real estate fund which closed in 2007 on €3 billion ($4.6 billion) of commitments from 21 investors.

Aberdeen buys Goodman
Aberdeen Asset Management has agreed to buy rival Goodman Property Investors for £89 million ($176 million; €113 million). The acquisition grows assets under management for Aberdeen Property Investors, Aberdeen's property arm, by more than 42 percent to £24 billion making it one of the world's ten biggest property asset management firms, according to the firm. Goodman's portfolio comprises approximately 93 percent direct or indirect property investments in the UK. The deal expands Aberdeen's position in the UK and at the same time strengthens its presence on the ground across Europe and Asia.

Jelmoli drops €2bn deal
Swiss company Jelmoli Holding has dropped plans to force Israel's Delek Real Estate and subsidiary Delek Global Real Estate to complete on a CHF3.4 billion (€2 billion) property deal in Europe. Jelmoli Holdings last year said it had commenced legal proceedings to “enforce its right for specific performance” for the purchase of its Swiss department store portfolio. However, according to an announcement by Delek last month, Jelmoli is now only claiming damages resulting from the alleged breach of the agreement. Delek Global is contesting that any breach occurred. Jelomoli is seeking CHF275 million in damages, plus interest.

Dublin firm eyes UK snow resort
Dublin private equity real estate firm First Equity Group is a step closer to developing a project it says is the world's first winter sports resort after the UK government said it was “minded” to approve the plans. First Equity owns 70 percent of Onslow Suffolk, the company behind the project, which will house Europe's largest indoor ski slope. The resort will also feature a nursery slope, external ice rink, speed skating track, dry bobsled push start track, a 1.5km crosscountry ski run and National Winter Sports Academy. The firm, established in 1995, is primarily focused on debt and has around €2 billion (3.15 billion) assets under management, 55 percent of which are in the UK, 25 percent in the US, 18 percent in Europe and two percent in Ireland.

ING tops up office fund
ING Real Estate has recently acquired two office properties in France for about €70 million ($109 million) for its ING Real Estate Office Fund. The assets are Le Millenium 1, a 6,873-square-meters office the center of Bordeaux, and L'Open, an 8,000-square-meter office in the Forum Seine area of Issy-les-Moulineaux, south west of Paris. ING Real Estate also acquired a new logistics center in Canly, Oise, north of Paris. That building was acquired for about €17 million on behalf of the ING Real Estate Industrial Fund Europe.

Drago seals €315m Spain deal
Drago Real Estate Partners has signed a deal to acquire three buildings in Madrid and Barcelona from communications group, Grupo Prisa. The €315 million ($493 million) deal will leave Drago landlord to some of Spain's best-known companies, including the widely-circulated daily newspaper, El País.