Perella Weinberg sale prompts ‘trojan horse' claim

A New York private equity real estate fund managed by Leon Bressler has sold a 51 percent stake in a German shopping centre operator to his former company, Unibail-Rodamco prompting criticism from market peers.

New York firm Perella Weinberg has made an exit on behalf its first real estate fund by selling a 51 percent stake in Mfi, German’s second largest shopping centre operator, investor and developer, for €383 million.

The buyer was Unibail-Rodamco, the French-listed property company that used to be run by Leon Bressler who today heads Perella Weinberg’s real estate platform.

As a result of his current involvement with Perella Weinberg and his previous involvement with Unibail-Rodamco, various real estate industry figures have labelled the deal a ‘trojan horse’ investment for Unibail. A report in Property Investor Europe in the wake of the deal contained a quote from one unnamed European industry source as saying: “It certainly looks like a trojan horse to me – and to a lot of other people.”

However, at a news conference trumpeting the deal, Guillaume Poitrinal, the successor to Bressler, underlined the sound financial basis of the deal. He said: “The partnership we signed with Perella Weinberg is no stranger to the relationship I have with Monsieur Bressler. It is a relationship of trust but is also uncompromising financially.”

Perella Weinberg bought into Mfi on behalf of Perella Weinberg Real Estate Fund I, a maiden property fund that raised €1.2 billion in 2008. The exit involves selling a 51 percent stake in the holding company that owns 90.4 percent of Mfi. In addition, Perella Weinberg is selling a 50 percent stake in Ruhr-Park, one of the biggest shopping centres in Germany, also to Unibail-Rodamco.

Unibail-Rodamco said the value of the underlying assets in the transaction amounted to €1.5 billion, with an additional estimated €530 million of development potential yet to come. The €383 million price-tag will be paid in two instalments; €316 million upon closing and €67 million on June 2014.

Details of the agreement also revealed how a put-option on Perella’s remaining stake in the holding company is in place from July 2014 until March 2017.

The deal is also part of a wider understanding that will see the two companies “work in partnership” for future investments in Germany, with a shared ambition to create a major player in the shopping centre segment.

The company pointed out Germany had the highest GDP in the Eurozone with a 60 bps per annum growth over peformance since 2005. The German economy benefits from strong fundamentals with low household indebtedness, low unemployment and expected wage growth which are expected to drive consumption growth,” it said.