Sailing from Greece

With a new manager and a war chest of capital, Global Finance looks to the East for lucrative European property deals.

Global Finance, an Athens, Greece-based private equity firm, recently made the first investment out of its newly launched private equity real estate fund. The vehicle, Global Emerging Property Fund, had a first close on €125 million ($151 million) last year and plans to have a final close in June with more than €150 million in equity commitments.

Interim investment director Theodoros Kiakidis has been working with the fund in anticipation of a new hire—Roger Peters was slated to join the firm in late March from the Budapest office of logistics REIT ProLogis.

“The operational side [of real estate investing] is very detail-oriented,” says Kiakidis, whose background is in private equity deals in Eastern Europe. He adds that deal negotiations and structure are relatively similar between the two business lines.

Kiakidis says the property fund is looking primarily at Romania, Bulgaria and Serbia, but it has an allocation to work on transactions in neighboring countries like Croatia and the Ukraine, as well as Central Europe. According to Kiakidis, Global Finance has been doing private equity deals in the region since 1994.

In terms of property sectors, the fund will focus on office, retail and logistics, with a lesser focus on residential opportunities.

Kiakidis notes that the fund's strategy is increasingly focused on development margins, rather than pricing. “If we were speaking a year or a year-anda-half ago, I would have said price levels,” he says. “Now I would say development margins.”

Still, he adds that while yields are down in the region, there are still good opportunities to be found. “We feel there is an opportunity for some development margin and some yields which—compared to Western Europe—are still very attractive,” he says.“With leverage, it's still an attractive proposition if you hold it long enough.”

In February, the firm announced that it has acquired 60,000 square meters of property on Petricani Street in Pipera, Romania, for a development into a business park. The group estimates that the total investment, completed in three phases, will be around €140 million. “We've bought the land and it's now in the development phase,” he says.

Kiakidis notes that the firm also plans to team up with local operating partners on deals. “We like to share deals,” he says. “We also do that in our equity business, especially when people bring something to the table.”

Investors in the fund include the European Bank for Reconstruction and Development and Vienna-based Immoeast, a subsidiary of Austrian property company Immofinaz Immobilien Anlagen.

Fortress expands German team
Guido Pinol will be joining Fortress Investment Group Germany, the German subsidiary of the New York private investment firm. Pinol will be the head of the commercial real estate acquisitions group, focusing his efforts on Eurocastle Investment, a listed, German commercial real estate firm owned by Fortress. Richard Ellis since 2002, Pinol had most recently been the company's managing director and head of investment advisory services. Before that, Pinol was the head of portfolio investment for Jones Lang LaSalle's German operation. Eurocastle, a closed-ended investment firm listed on the Euronext Amsterdam Exchange, is externally managed by Fortress, which recently purchased a 48,000-unit residential portfolio from the city of Dresden in a landmark deal valued at $2 billion.

New Carlyle JV taps director
The newly launched Carlyle Skelton venture has reportedly appointed Daniel Chapman as investment director. Chapman, who joined Skelton in 2002, will work with the Carlyle Skelton Development Group to invest a leveraged £750 million in development projects in the office, logistics, retail, hotel and residential sectors throughout the UK. Duncan Moss founded Skelton in 2001 with the backing of a private family trust—the company currently has a £120 million development portfolio and a £100 million investment portfolio.

Rynda starts Hunter consultancy
Rynda Property Investors, the new private fund management business of UK property investment and development firm Halladale Group, has appointed David Hunter as a consultant. Hunter comes to Rynda from a position as a managing director of Reading-based Arlington Property Investors and will set up Glasgow-based Hunter Advisers to consult with international and UK-based property funds. Rynda is fronted by Michael Walton, formerly of the European principal investing and fund management businesses at Citigroup Property Investors. The London-based company plans to operate funds throughout Europe and across the risk spectrum. It plans to launch its first vehicle later this year.

MIL Equity appoints Hungarian chief
Boston-based MIL Equity Partners, a private equity real estate fund looking to invest $100 million in the property markets of Central and Eastern Europe, has appointed Stephen Grill to represent the firm in Hungarian real estate transactions. Grill will also join the firm's advisory board. He was formerly executive managing director of New York-based Murray Hill Properties, as well as corporate managing director at brokerage Julien J. Studley. MIL also recently announced the resignation of chief financial officer Michael Perlas, as well as the appointment of Robert Weinberg to the firm's board of directors. MIL is currently raising its debut opportunity fund, which will invest in Bulgaria and neighboring Central and Eastern European countries.

Reports: Tchenguiz making pub offer
Property tycoon Robert Tchenguiz is planning to make a £4-billion bid (€5.7 billion; $6.7 billion) for the Mitchells & Butlers pub chain via his R20 vehicle, according to UK press reports. The bidding consortium also reportedly includes international private equity firm Apax Partners, Royal Bank of Scotland, the Halifax/Bank of Scotland group HBOS and investment bank Goldman Sachs, with debt being lined up by Goldman and Barclays Capital. The Times reported that Mitchells & Butler, owner of UK chains like All Bar One and Harvester, plans to contest the takeover bid.

Carlyle sells Paris office to GECINA
Carlyle Europe Real Estate Partners is selling its Valmy office building, located in Montreuil in Eastern Paris, to French real estate firm GECINA for more than €130 million ($157 million). Carlyle acquired the building as it was being developed in April 2004 as part of its initial, €430-million Europefocused property fund. The seven-story building is comprised of 29,500 square meters of office space, a quarter of which has been leased for 12 years by a state-owned company. The Carlyle vehicle has invested in five other Parisian office buildings.

Doughty Hanson sells Stockholm offices
Private equity real estate firm Doughty Hanson is selling its Liljeholmsstrand office complex in Stockholm, Sweden. Terms of the deal were not disclosed, but the firm said in a statement that the exit represented a gross IRR of 16 percent on the investment and returned $34 million (€28 million) to limited partners. Doughty Hanson invested in Liljeholmsstrand, a 38,000 square-meter waterfront office complex near Stockholm's city center, in December 2000. The sale was the eleventh realization from the firm's first property fund.

Behringer expands to Holland
Dallas-based real estate firm Behringer Harvard has completed its first international acquisition, purchasing a five-story office building southwest of Amsterdam. The building, completed in 1999 and part of a four-building complex near Amsterdam's Schiphol Airport, has 41,376 square feet of space and parking for 106 vehicles. It is fully leased to a subsidiary of cable television company Liberty Global. The investment came out of the Behringer Harvard Strategic Opportunity Fund I, which closed on $65 million (€54 million) and is now fully invested.

Investors eye UK dance clubs
An investor group including Nick Leslau, alongside Robert and Vincent Tchenguiz, has acquired a five percent stake in UK nightclub group Luminar and has implied it is interested in a possible takeover bid. Luminar, which owns 240 clubs, has freehold property valued at around £80 million. The group's dance club division continued to be profitable, but the company announced in late March that total sales for the previous year—including its themed restaurants— were down 0.6 percent.