Grove signals strategy shift to the US

The $5bn private equity real estate firm founded by former Goldman Sachs’ Whitehall Funds head of Europe, Richard Georgi, is looking to redeploy staff from its offices in Europe and Asia to the US in a marked strategy shift.

Grove International Partners, the private equity real estate firm which has raised around $5 billion of capital commitments since inception, has signalled its intent to shift investment focus from Europe and Asia to the US.

The company, which has built its reputation making platform investments in real estate-rich companies such as Aurelis in Germany, currently employs around 50 professionals in New York, London, Frankfurt, Amsterdam, Tokyo and Singapore.

As part of its decision to focus on the US, some of the non-US contingent of its headcount will be redeployed stateside, it said.

The news comes as key Grove professionals assembled in New York this month for the firm’s annual company “off-sight” meeting, where they were expected to further discuss personnel changes. 
Speaking from New York, Markus Hens, head of Grove’s office in Frankfurt, Germany, said: “We have galvanised our team in the US and moved resources to the US. The investment strategy drives a lot of this change, which is typical for a globally active boutique investment private equity fund.”
Grove has its roots in Soros Private Fund Management founded by George Soros, from which it spun out of in 2004 and quickly rose to prominence as one of the largest private equity real estate firms in the world. It has raised $5 billion in two funds, the first being Cypress Grove International LP in November 2005 and the second Redwood Grove International in January 2007,
It was founded by Richard Georgi, a former head of European investment activities for Goldman Sachs’ Whitehall Street Real Estate Funds, who himself relocated to New York where he continues to lead the company.
The other two managing partners of the firm are Richard Mully in London, who has primary responsibility for Grove’s investment strategy and oversight in Europe, and is a former head of European Merchant Banking for Prudential Insurance Company of America (PRICOA), and Dang Phan, who serves as chief operating officer and chief financial officer of Grove. Phan was also at Goldman Sachs prior to Grove where he was the first chief financial officer of the Whitehall Street Real Estate Funds, beginning in 1993.
In all, there are 12 partners at Grove and a further three principals.
Grove has made numerous high profile deals in Europe and Asia but early evidence of its US plan has come in the form of two recent investments. It has formed a business in California with Ned Fox called VPI where it has made two large acquisitions involving repositioning offices. Fox is a former chairman and chief executive officer of Center Trust, a real estate investment trust that was acquired in 2003 by Pan Pacific Retail Properties.

It has also established a business in New York with William Macklowe, son of legendary investor Harry Macklowe, who set up WMC Ventures last year and has raised enough firepower to acquire $1.5 billion of Manhattan property.

In terms of future European investments, Grove’s Hens said that Germany remained a viable investment destination but only very selectively. The firm has holdings of more than $500 million of equity in platforms such as Aurelis, a real estate company focused on development and active asset management of a large portfolio acquired in 2007 and, more recently, a hotels venture with Event Holding focused in Cologne.

See the October issue of PERE for more.