Real estate is as cut throat a business as you're likely to find, with prices shifting rapidly as buyers outbid each other in good times and landlords undercut each other in bad. At least, that is the theory. The French competition authorities recently ruled, however, that six of Europe's most prestigious hotels had not been playing by the rules.
The H^tel de Crillon, H^tel George V, H^tel Ritz, H^tel Plaza Athénée, H^tel Meurice and H^tel Le Bristol represent the height of Parisian luxury. Each has received five red stars in the Michelin travel guides for its leisure facilities, gastronomic cuisine and grand location. Such luxury does not come cheap: rooms can cost more than €700 ($849) a night, while suites cost as much as €6,000.
France's competition watchdog, though, thinks that it should have come cheaper, and has fined the hotels a total of €709,000 for colluding to fix prices. A four-year investigation into allegations first raised on French TV station M6 found evidence that the hotels' management were exchanging commercial information through regular e-mails and meetings. The 57-page report which concluded the investigation quoted extensively from messages between the hotels' staffs, and cited charts that they had circulated showing occupancy levels, average room prices and revenue information. It also visually demonstrated the results of such collusion: a graph showed that the hotels' prices had moved almost in step during the period under investigation.
The watchdog has fined the hotels between €55,000 and €248,000 each, with the sum determined by the earnings of the hotels and the length of the time they were involved in the price fixing. The heaviest fine fell on the Crillon, the hotel located in Louis XV's grand Place de la Concorde that Starwood Capital bought last year as part of the Taittinger portfolio.
Starwood has been linked, tangentially, to such investigations before: in 2003, Starwood Hotels, the hospitality chain started by Starwood Capital founder Barry Sternlicht, was charged by the state of Washington with antitrust violations at two of its hotels in Seattle. The case forced Starwood to change its business practices and pay the state more than $1 million in costs and fees.
The firm could not be reached for comment. Neither has the Crillon been forthcoming: the International Herald Tribune reports that its journalists were asked to leave the premises, and had to settle for interviewing guests outside the hotel. It seems that talk, unlike a room at the Crillon, is still reassuringly cheap.
Aberdeen closes in Norway
Sweden's Aberdeen Property Investors has held a first closing of its second Norwegian Fund, after raising NOK 298 million (€37 million; $44 million) in just one month. The fund will utilize leverage of 75 percent and will acquire a portfolio of properties diversified between different sectors, regions and types of tenant. Ubbe Strihagen, international director of Aberdeen Property Investors, said in a statement: “Property in Norway is expected to show a continuously high total return, in comparison with Europe.”
First close for Doughty's second
Doughty Hanson, the UK private equity firm, has held a €166.5 million ($201 million) first close of its second real estate fund, Doughty Hanson & Co European Real Estate Fund II. This represents approximately one-third of the fund's final target of €500 million, €57.5 million of which will come from the firm's managers. Doughty Hanson said in a statement that investors include both limited partners from its predecessor, the €493 million Doughty Hanson Real Estate I, and new investors. The new fund will target opportunities in France, Germany, Austria, Italy, the UK and the Nordic region.
Heitman closes third CEE fund
US real estate investment firm Heitman has held a €350 million ($410 million) final close on its third Europe-focused fund. Heitman European Property Partners III will target office, warehouse, residential and retail investments in Central and Eastern European markets including Poland, Hungary, the Czech Republic, Slovakia, Slovenia, the Baltic States, Romania and Bulgaria. The fund has already committed to four transactions in the region valued at more than €200 million. Heitman's European team operates from offices in London, Warsaw, Frankfurt and Luxembourg
Hines raising€1.5b core fund
Hines, the US property developer and fund manager, is raising a new €1.5 billion ($1.8 billion) fund to invest in European real estate. The Hines European Core Fund will be an evergreen fund with an ultimate target of €1.5 billion. It will have maximum leverage of 50 percent and will invest in the EU and future accession countries, as well as Norway, Switzerland and Russia. Half of the fund will be allocated to the five core countries of France, the UK, Italy, Germany and Spain. The firm is expecting a first close of approximately €100 million in March.
ING holds €200 million first close
ING Real Estate, the property investment arm of the Netherlands' ING financial group, has held a first closing of its new fund. The ING Real Estate European Industrial Fund has raised €200 million ($242 million) from institutional investors. With these commitments it has acquired four logistics properties located in Germany, France, Portugal and the Netherlands. The fund's target size is €1 billion. The fund is a non-listed, semi-open ended fund which will invest in warehouses, distribution centers and light industrial centers.
PruPim's Taylor joins HSBC
Chris Taylor, the head of portfolio management at Prudential Property Investment Managers, is leaving after 18 years to head up the European team at HSBC Specialist Investments. He will be focused on making opportunistic investments in continental European property markets on behalf of the bank's clients. His leaving date is unclear. Taylor is believed to have earlier rejected an approach from London & Stamford, the new firm of UK property entrepreneur Raymond Mould.
ING adds two to securities business
ING Clarion Real Estate Securities, the property arm of the New York-headquartered investment manager, has hired Simon Robson-Brown as a senior vice president in the firm's London office. He joins the firm's real estate securities department from Swiss bank UBS, where he was a director of real estate equity research. The firm has simultaneously hired Daisuke Hotta as a senior investment in its Tokyo office.
Changes at CapMan
Finnish private equity firm CapMan has appointed Jerome Bouix to its fundraising team. He will be responsible for fundraising, investor relations and communications, working directly under CEO Heikki Westerlund. CapMan expanded its operations into real estate in June 2005, when it closed a €500 million ($605 million) property fund, CapMan Real Estate I. To date it has purchased 17 commercial properties in and around the Finnish capital, Helsinki. Its strategy is split between core, value added and opportunistic segments, and it focuses mostly on office properties.
All change at AAIM
Adrian Cassidy, a senior financial analyst at the UK's celebrity-backed fund manager Active Asset Investment Management, has been appointed head of its new specialist finance division, AAIM Capital. He will be responsible for structuring the financing of the group's investments. In related news, co-founder Robert Kanerick is to leave the firm to establish his own private property investment boutique, according to Property Week. Details of the new firm have yet to be announced, but it is expected to be called Synergy. AAIM Property Fund I has so far returned an IRR of more than 100 percent to its investors.
Schroders grows property research team
Mark Callender and Alexandra Krstalogianni have joined the international property research team of global asset management company Schroders. Callender joins from a four-year stint as research director at Investment Property Databank, and will be the firm's head of international property research. Krstalogianni leaves research consultancy Property Market Analysis to become head of international property forecasting. Schroders has recently been bulking up its real estate operation. Last year the firm acquired Neil Turner to head up its international property investment and research division and Andrew Thomson to lead its property product development Team.