Revetas set for transformation with €300m TriGranit purchase – Exclusive

US private equity giant TPG expected to make ‘target beating’ returns for its maiden private equity real estate fund from exiting the Budapest-based developer. 

Revetas Capital, the London-based private equity real estate firm focused on Central and Eastern European markets, is on the cusp of a strategic expansion with the purchase of developer TriGranit, PERE can reveal.

The firm, led by founder and managing partner Eric Assimakopoulos, is understood to be leading a club of investors in the acquisition of the Budapest-based developer from the property division of US private equity giant TPG Real Estate in a deal believed to be valued at approximately €300 million

The deal is thought to have been agreed and completion is expected within months, according to two sources familiar with the matter who declined to be named. “It’s effectively signed, sealed and funded,” one of them said. “It’s done. Now is only paperwork, mechanical stuff.”

Assimakopoulos: leading Revetas in its expansion

Revetas will inherit a pipeline of assets under management and development with a gross completed value of close to €600 million. The assets include offices and retail properties in cities including Budapest, Krakow, Katowice, Poznan, Bratislava and Zagreb.

Significantly, the deal will also see Revetas inherit a development capability with a long track record to add to its existing value-add and opportunistic investment and asset management strategies. Since its formation in 1995, TriGranit has developed nearly 50 properties across seven Central and Eastern European countries. The properties comprise approximately 17 million square feet with an aggregate value of around €2.5 billion.

The second source described the deal as being transformational for Revetas as the firm would benefit from developing its own property alongside its traditional strategy of acquiring distressed or undervalued assets. “[They were] looking for a strategic way to expand their presence. They really wanted a group, team and platform with the credentials to expand their business overall,” he said.

The transaction also represents a “target beating” exit for TPG’s real estate business, led in Europe by partners Anand Tejani and Michael Abel, and less than three years after it purchased the developer, the source said. TPG acquired TriGranit in 2015 in a complicated transaction involving the consolidation of multiple ownerships, including those of its former boss Sandor Demjan, Sandor Csanyi, chairman of Hungarian bank OTP Bank, Canadian entrepreneur Peter Munk and Immofinanz, an Austrian property company.

Bonarka City Center: The Krakow shopping center netted TPG a more than 300% IRR and 3x equity multiple exit

TPG’s acquisition involved a Poland-heavy portfolio of retail and office assets, some of which were sold during its ownership. These included Krakow’s biggest shopping mall, the 980,000-square foot Bonarka City Center, to South African property company Rockcastle in a deal valued at €361 million in 2016. It is thought that transaction generated a more than 300 percent IRR and 3x equity multiple for the private equity firm. Another exit was the joint sale with fellow US private equity firm Heitman, of Millennium Towers, a 757,800-square foot office tower in Budapest, to CA Immo, another Austrian property company, for €175 million.

Tejani: co-leads TPG’s real estate platform in Europe

TPG’s investment was made on behalf of TPG Real Estate Partners II, its first commingled private equity real estate fund, which was closed on more than $2 billion of equity commitments in 2015 and which today is understood to be almost fully invested. According to PERE data, a successor fund is currently in fundraising; it has already attracted $1.62 billion of its $3 billion capital target.

Revetas, meanwhile, is believed to have raised the first money for its third fund, Revetas Capital Fund III. The firm is thought to have raised approximately €60 million so far against a target of €350 million. Predecessor fund, Revetas Capital Fund II, is fully invested and is currently projecting gross IRRs of 24 percent and an equity multiple of 1.6x.

Neither Revetas nor TPG Real Estate would comment.