summary overview february 2020 - patron capital
TRANSCRIPT
Summary Overview
February 2020
Patron Capital Overview• Established European property investor over 20 years
➢ Operations across Europe with advisory offices in the UK, Luxembourg and Spain with major operating partners in
most markets including in Germany, France and Portugal
➢ Experienced 73-person team including 30 investment professionals, supported by 11 advisers, with regional and
product focused expertise
o Average of 19 years experience across the investment team
➢ Hybrid owner operator model supporting local partners across Europe
$109,700,000
PATRON CAPITAL L.P., I
Pan-European valueoriented property and asset based corporate investments
October 2002
€303,000,000
PATRON CAPITAL L.P., II
October 2004
Pan-European value-oriented property and asset-based
corporate investments
€895,000,000
PATRON CAPITAL L.P., III
March 2007
Pan-European value-oriented property and asset-based
corporate investments
(with GP commitment of up to €45,000,000)
€1,100,000,000
PATRON CAPITAL L.P., IV
July 2012
Pan-European opportunisticdistressed property and assetbased corporate investments
(including €100,000,000 dedicated discretionary co-investment pool and apx. €220,000,000 of co-investment
capital within investments)
C. £62,000,000
(C. €96,000,000)
PATRON CAPITAL
CAPTIVE FUND
DEDICATED FUND RAISE
FOR THE ACQUISITION OF
OCWEN UK (RENAMED
IGROUP) A LEADING
PLAYER IN THE SUB-PRIME
MORTGAGE MARKET
October 1999
€948,632,391
PATRON CAPITAL, V L.P.
July 2016
TARGETING OPPORTUNISTIC
DISTRESSED AND UNDERVALUED
PROPERTY AND PROPERTY
RELATED INVESTMENTS ACROSS
EUROPE
(including €143,000,000 of co-investment capital )
2
Deep Value Investment Strategy
3
• Identify granular and/or complexopportunities and properties withincorporates
• Value-add through asset management,improved strategy and introduction of clearfocus, sell into domestic market once assetstabilised
• Drive net equity multiple of 1.6x+ over 3-5years
➢ Target unlevered p.a. return of 11%-13%;approximate net profits of 35%-45% ontotal cost
➢ Use leverage 50%-65% LTC debt to movelevered returns to 16%+ and 1.6x+ equitymultiple
• Ensure fund/capital pools properlydiversified; limited development risk
• Limit leverage as tail risk protection6m 1y 2y 3y 4y 5y
Classic Investment Path
2.2x/20-25%+50%
1.5x/17-20%+20%
>1.0x/5-10%+10%
0%
1.8x/17-20%+35%
Multiple/IRRNet Margin
Patron Zone(less leverage)
Opportunistic Zone
ValueIndicator
Time
4
Target %
Property assets below intrinsic value deemed non-core
by parent/owner
Companies with strong cash flow and value supported
by underlying real estate assets, properties that have
operational-tied variable cash flow
20-30%
Challenged situations solved by repositioning assets or
platforms for broader market appeal
Financial securities (e.g., loans, equity release) backed
by real estate, typically residential
Institutional Non-Core and
Distressed Property
Corporate Acquisitions and
Operational Real Estate
Complex Positions
Real Estate Credit
Focus on Investments below Intrinsic Value
CALA Banner
40-50%
20-40%
10-30%
10-20%
Deep Value Investment Strategy
5
Origination - Geographic Focus• Western Europe remains the prime focus with increasingly more granular smaller opportunities dominating our activities
(1) Where at least one day a week required of investment team
Note: The % in the above charts represent proportion by capital
(1)
Other1%
Germany / Switzerland
15%
Western Europe36%
UK / Ireland44%
Central Europe3%
Eastern Europe1%
Total Evaluated Opportunities : 1999-2019
3,047 Opportunities - $123.2bn
Other0%
Germany / Switzerland
33%
Western Europe33%
UK / Ireland34%
Total Evaluated Opportunities : AGM 2018 - AGM 2019
254 Opportunities - $7.2bnOther
0%
Germany / Switzerland
33%
Western Europe33%
UK / Ireland34%
Total Evaluated Opportunities : AGM 2018 - AGM 2019
254 Opportunities - $7.2bn
(1)
Patron Platform – Integrated and Interactive (41)
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Christoph Ignaczak
Julian Rosenberg
Pedro Barcelo
Arnau Osorio
Yolanda Leal
Alejandro Pasquin
Vicente Conesa *
Mark Collins
Daniel Weisz
Matteo Busà
Jonatas Szkurnik
Rafael Fitoussi
• Dedicated 73-person team including 41 investment professionals averaging 19 years of experience and Senior Team averaging 24 years of experience
COUNTRY FOCUS
Keith M. BreslauerShane Law
Vanessa Sloan
Matthew Utting
Sir David Capewell *
Kevin Cooke
Richard Sykes
Emilio Cereijo
ADVISERS
GENERALISTS
Senior Team Member
ACROSS EUROPE, ACROSS PRODUCTS
Wiktor Lesinski
Tim Swift
Nicolò Benzi
Juan Du
Roy Binkowicz
Julius Kühn
Clothilde Guittard
Corporate
Hotels & Leisure
Pubs
Home Building
Development
Commercial Credit &
DistressedResidential & Consumer Distressed
Healthcare
Education
Strategy & Business
Development
Social Impact (WISH Fund) Project Management
KEY
* Senior Adviser
Robert BoothJason MeadsBertrand Schwab
Guillaume LefortMichael Capaccio
Leonardo Kutova
Ashish Kashyap
Nate Kornfeld *
Stephen Green
Irina Stamate-Rocha
Fei Xie
Tim Street *
Danny Kay *
PRODUCT FOCUS
Rod MacKinnon
Patron Support Team, Risk and Compliance (32)
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Investment TeamKeith M. BreslauerManaging Director
Shane LawChief Operating Officer
Senior Team
Jackie Burn *Human Resource
Kendall LangfordGeneral Counsel/Compliance
Mark ParnellFinance Director Geraldine Schmit
Managing Director
Daniel Cohn Senior Legal Counsel
Farhod MoghadamSenior Legal Counsel
Caroline McGrath Investment & Closing
Denise GoodwinInvestment & Tax
Mark HarrisGroup Financial Accountant
Seemone CheungFinancial Accountant
Andreas BlumSenior Accountant
Administration
Charlene CarrLegal PA
Lisa DaveSenior Team PA
Victoria CollinsFinance PA
Meritxell GonfausAdmin, Spain
Stephanie BohlerAdmin, Lux
Legal Finance & Tax Luxembourg
Stuart AnsherFinancial Accountant
Suchilla DillonAccountant
Steve Van Den BroekCOO
Halim MekbelAccountantRichard Carter
Assistant Fund AccountantMoses Kim
Transaction Assistant
Michael HaydonSenior Accountant
Senior AdvisersJonathan PaganelliSenior Corporate
Officer
Alexis TabarySenior Corporate
Officer
Amelia CarterPA to Keith M. Breslauer
Hayley St AngeTeam PA
Andrew HaigFinancial Accountant/
Fund Modeller
Kalie CoveleyTeam Support
William Davies-HumphreysLegal Associate
Sylvie NuceraAccountant
* Senior Adviser
Floella JohnsonSenior Team PA
Investment Performance – Overall
8
• Since 1999, Patron has invested in 80 investments totalling €2.9 billion of equity and over €12 billion of
gross asset value predominantly across Western Europe
➢ The primary strategy, comprising 87% of invested equity, is towards opportunities in Western
Europe. Notwithstanding the effect of the GFC, these investments have seen very positive returns
➢ Patron’s overall performance since the GFC has been significantly higher
Past Eighteen Years
Number of
Investments
Invested &
Identified
Equity
Realised
Proceeds
Unrealised
Proceeds
Total Realised
& Unrealised
Proceeds Gross IRR
Gross Equity
Multiple
Western Europe
(primary strategy)
71 €2,430m €2,776m €1,108m €3,884m 17% 1.60x
Post GFC 44 €1,570m €1,826m €1,039m €2,865m 22% 1.83x
Note: Performance figures as at September, 2019
WORKING HARD TO HELP CHANGE THE WORLD
To date, Patron Charitable Initiatives have helped…
Recent Awards - Selection
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Property Fund Manager
of the Year
Best Places to Work in Property
Responsible Investor of the Year 2016
HealthcareProperty Developer of
the YearFinancial ServicesDeal of the Year
Property Fund of the Year
Corporate Social Responsibility Award
2019Deal of the Year 2018
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Specific Investment Review
Selected Opportunities
(ordered by Fund and by investment size within each Fund)
Opportunity
• Grainger, a listed residential property company, changed its focus to developing PRS units
and decided to sell its non-core Retirement Solutions (RS) business. The business
comprises a portfolio of over 3,800 ‘Home Reversion’ equity release assets.
• On 31st December 2015, Patron exchanged contracts with Grainger to acquire the RS
Business.
• Completion took place in May 2016 post regulatory approval – renamed Retirement
Bridge Group.
• June 2017 – acquired Sovereign Reversions (c. 700 assets)
Home Reversion
• Home reversion is an equity release product where the homeowner sells part or all of the
equity in his home in exchange for a discounted appraisal value of the equity and a right to
live in the property until it is vacated upon the occupant’s death or move into long term
care.
• The industry underwent a significant improvement in market perception after home
reversions were regulated by the FCA since 2007.
Portfolio (as at May 2015 cut-off date)
• 3,839 properties located across the whole of the UK, with concentration in the south of
England.
• Very seasoned portfolio (over 10 years on average) with average age of tenant of 82 years.
Business Plan
• As part of the acquisition, Patron acquired the platform, including staff, systems,
regulatory licences, brand and any other intellectual property.
• Strategy assumes no new origination or acquisition and sale of the business in 4 years.
12
UK Consumer – Retirement Bridge (Fund V)
13
UK Consumer Leisure Program (Fund V)
• The acquisition of Punch Taverns Plc in August 2017, following
Competition and Mergers Authority approval. The acquisition was
funded in part by the simultaneous back to back sale of a
substantial portfolio of Punch’s assets to Heineken.
• A total of 3,254 pubs were acquired, of which 1,879 were sold to
Heineken. Patron retained ownership of 1,375 pubs and the head
office operations, of which 1,323 are held in a securitisation
structure and 52 pubs and the head office operations held at
TopCo.
• Add-on acquisition of Laine in 2018 with 55 pubs and other single
assets, small portfolios
• The business plan is predicated on
➢ strategic capex across the core estate to improve the underlying
quality of the portfolio
➢ continued roll-out of a hybrid tenanted / managed operating
model
➢ sale of the non-core pubs
EastPoint, Ireland – sold (Fund V)• Acquisition of 4 multi-let office buildings with gross internal area of c.153,000 sq.
ft. on EastPoint Business Park in Dublin, Ireland.
• EastPoint is c.40 acres in size, with approx. 1.5 million square feet of primarily office
space (grade B) across 35 buildings. EastPoint has been developed in phases since
the site was originally acquired and developed by Earlsfort Developments in the
1990s. The park is located adjacent to Dublin Docklands (where a lot of central
Dublin office development is taking place, including the new Central Bank HQ), and
in close proximity to the traditional core CBD area. The park has attracted a
concentration of TMT tenants.
• The assets were acquired in joint-venture with O’Callaghan Properties (“OCP”) and
Earlsfort Developments (“Earlsfort”). OCP are Fund IV’s existing JV partner on
Project Drive, including acting as asset manager on Northside Shopping Centre,
where there is a strong working relationship. Earlsfort originally developed
EastPoint and are the existing part-owner and asset manager for several units on the
Park, demonstrating their good knowledge of the Assets / local market. Both OCP
and Earlsfort are investing alongside Patron.
• Strategy is to lease up vacant space and regear/release existing let space, where
appropriate.
• Further 80,000 sqft acquired early 2017 - 3 assets - J, K and U on map
• Sold in September 2018 to Madison International Realty
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• Acquisition of 43 retail units (32 supermarkets, 5 Cash&Carry
and 6 high street units) across Spain, comprising 41,567sqm of
GLA. Main tenant is El Árbol/DIA (#2 chain in Spain), with 31
leases, and other individual tenants (including ING, Sanitas,
Cortefiel).
• Purchased from Blackstone who acquired the portfolio within a
larger €23bn transaction from GE in 2015.
• Strategy comprises lease up of vacant space and sale over a 3-4
year investment period, with some capex across portfolio as
appropriate.
• Business plan undertaken by Patron team working with key local
brokers with extensive experience in each region, as well as
Aguirre Newman, CBRE and Vicente Conesa (Patron’s long
term advisor and local partner in the Fund III Poblenou
investment).
15
Project Green, Spain (Fund V)
GSPP – Cologne, Germany – sold (Fund V)
• Acquisition of a 14,372 sqm office building on theborder of Cologne’s city centre, with significant andunique redevelopment potential in an economicallystrong and affluent city with a good micro location andexcellent connections to public transport.
• Seller was Patrizia who shifted strategy from a directinvestor to primarily a Spezialfonds manager. As aresult the asset became non-core for them.
• JV partner is Development Partner AG, an experiencedoffice and retail developer and investor with a strongtrack record.
• Strategy to reposition the asset as a good building and acheaper alternative within the premium segment whichis undersupplied in the local market, supported by anextensive capex program and lease up of the asset.
• Sold in July 2019 to AEW
16
• In late 2009 strategy initiated to take advantage of:
➢ imbalance between demand for high quality accommodation, care and
services and current old/poor supply
➢ impact of an ageing population
➢ current market conditions – led to overleveraged larger players or smaller
poorly capitalised operators unable to take advantage of new
• Strategy to build platform of at least 15-20 care homes within approximately 4
regional clusters in the UK
• Achieved through acquisition of land and subsequent development and
acquisition of existing operational premium care homes
• Management team established at Opco level to manage homes and program
• As of August 2014 - across both funds
➢ 10 sites operating and 1 under development – “core”
➢ 10 sites acquired or exchanged subject to planning for construction over the
next 18 months – “pipeline”
• In August 2014 sold the core portfolio and the operations to Health Care REIT
(HCN) and Sunrise Senior living
• Partnership with HCN agreed to develop out current 10 site pipeline plus
additional opportunities
• Current portfolio of 42 sites / homes (Fund V and IV)
➢ 11 acquired, and sold as part of original HCN/Revera partnership - now
ended
➢ 31 outside of agreement acquired / exchanged subject to planning / site sales
/ operating homes, of which 2 sold and 4 forward sold
17
UK Care Home Program (Fund V / IV / III)
CALA Homes - sold (Fund IV)• Acquisition in March 2013 of CALA Homes, a leading UK premium volume house builder
from Lloyds Banking Group (“LBG”) as part of bank’s non-core asset disposal strategy and
subsequent add-on acquisition in March 2014 of Banner Homes
• CALA is a national house builder with a 15,846 plot land bank equivalent to c.6.8 years of
production. CALA achieves the highest average selling price (“ASP”) among the UK
volume house builders, £509k vs. average of £233k
• CALA focuses on 3+ bedroom, single family homes in affluent districts of the UK, with
customers who are generally equity rich, with average LTVs of 65%
• For strategic as well as capital diversification reasons, Patron brought Legal & General
(“L&G”) and Electra Partners into the investment with Patron at 37%, L&G holding
47.5%, Electra 10.5%, management 5% - from a governance perspective Patron retains
operational control, with both Patron and L&G having board seats and Electra having a
passive role subject to material matters above a 10% of EV threshold
• Management team includes 21 professionals led by Alan Brown, CEO and Graham Reid,
CFO, who successfully turned around the CALA after the downturn and the LBG debt for
equity swap
• Business plan is predicated on the build out of the land bank acquired during the downturn
at attractive terms and the build out of “legacy” sites acquired pre-recession improving
gross margin from 16% at the time of acquisition to 21%. Profits generated from
developments are sufficient to replenish the land bank and position the business for exit
• In March 2014 CALA acquired Banner Homes, a leading premium house builder operating
in the South East and Midlands with a land bank of 2,360 plots and turnover of c.£140
million
➢ Banner greatly increased CALA’s exposure to more affluent areas in the South East of
England and the increased scale will improve the combined business margins through
operational leverage
• March 2018 – sale of Patron interest to Legal & General
Banner
CALA
18
• 89% equity share in the property assets and business of Motor Fuel Group (“MFG”), the 2nd largest
independent owner & operator of convenience retail / petrol filling stations (“Forecourts”) in the UK
➢ Total of 373 operational Forecourt assets – pro forma 333 (89%) freeholds and 40 (11%) leaseholds, with
unexpired lease terms typically in excess of 25 years
• Joint venture with Alasdair Locke, high-net-worth veteran of the oil, property and insurance industries, and
new management team
➢ Highly specialist and experienced partner with over 450 previous successful forecourt acquisitions,
turnarounds and asset managements to their credit
➢ Management team includes several experienced executives ex Murco UK (the UK subsidiary of Murphy
Oil)
• Initial MFG Platform investment completed Dec 2011 – corporate acquisition of the business and portfolio of
47 Forecourts, MFG then being the 5th largest independent forecourt owner /operator in the UK.
➢ Intrinsically high quality assets, significantly underperforming against industry average and historic
performance
➢ Business plan focussed on enhancing operations and profitability of retail assets via conversion to
efficient ‘Commission Operator’ management structure, systemic shop rebranding, dedicated capex
programme and improved supply agreements
• Enhanced returns from bolt-on acquisitions of additional PFS assets/portfolios - key ones include:
➢ “Scorpion Portfolio” acquisition, July 2013 - freeholds of 53 sites, let on long leases to Murco
Petroleum Limited (“Murco”)
➢ Murco Business acquisition, Sept 2014 - entire UK retail business of Murco, primarily consisting of a
portfolio of 223 high-quality Forecourt assets (including the Scorpion leaseholds), acquired by MFG
effectively off-market
➢ “Project Strawberry” - contracts exchanged 10th April 2015 for the acquisition of a portfolio of 90
Forecourts from Shell. Final completion October 2015, funded by senior debt refinance plus cash on
MFG’s balance sheet - no new equity required
• July 2015 – sale of platform to Clayton, Dubilier & Rice
Asset Location Map – MFG & Target Portfolio
MFG (288) Shell (90)
MFG (288) Shell (90)
19
Motor Fuel Group - sold (Fund IV)
Business Plan
• Target product segment - Prime credit with 65-70% average LTV
• Mid 2017 - launched near prime product up to 75% LTV
• Funding through senior debt from banks at significant advance rate and through capital markets and sales
• Securitisation of loan book completed July 2017
• Explore optionality in the platform - (a) additional secured loan products and (b) secondary loan portfolio acquisitions –acquired and further being explored
Opportunity
• Deleveraging by UK high street banks has resulted in a significant
undersupply of secured credit, creating an opportunity to create a high
yield secured lending platform, focusing on products like second charge
(2nd mortgage) loans, short-term (bridge) loans and shared equity
mortgages and achieve 8%+ unlevered yield
• In July 2013, Patron backed the senior management team of Nemo
Principal Finance, the only mainstream UK second charge mortgage
lender to survive the credit crisis, to setup a new platform and originate
second charge loans, leveraging their significant credit experience and deep
broker relationships
Second Charge Mortgage Product
• Loan to homeowner secured through a second charge on the property,
typically for debt consolidation and home improvement; consolidation
results in lower monthly outgoings
Shared Equity Product
• Shared equity mortgages are loans from housebuilders to new home
buyers which are secured through a second charge and have an equity
share in the underlying property
• Acquisition of loan portfolios, using established Optimum platform for
asset management
• December 2018 – sale of platform to Pepper Group
20
UK Mortgage Investments – sold (Fund IV)
• Investment program targeting acquisition of undervalued commercial properties in strong regional
commercial centres in the United Kingdom
• Program is primarily carried out in JV with Alliance Property Asset Management Limited - a UK asset
manager with significant experience in UK commercial markets and extensive existing asset
management/asset work relationships with UK banks and institutions
• Program Strategy:
➢ Targeting commercial or mixed use assets sub £20m lot size with value-add potential or undervalued
opportunities;
➢ UK focus, with particular emphasis on 2nd and 3rd tier centres still to be impacted by positive
inflows from institutional market
• First Investment - April 2014 - Thorpe Park, Leeds; (3% of program) - SOLD
➢ 21,000 sqft fully let office building located on out of town Leeds business park. Single tenanted
office space with ground floor retail element• Second Acquisition - December 2014 - Crossways, Dartford; (9% of program) - SOLD
➢ 42,600 sq ft office in two Grade A detached office buildings located on Crossways Business Park in
Dartford, South East of London, with 25,500 sqft /60% vacancy in one building• Third Acquisition - March 2015 - Arlington Business Park, Reading; (54% of program)
➢ 330,000 sqft in ten office buildings (with industrial asset sub-sold in April 2015) located on Arlington
Business Park in the Thames Valley / out of town Reading market - a key established office market
(West of London), with c. 105,000 sqft vacancy / 30% of space – subsequent 29,500 sqft 100%
leased add-on asset in November 2015• Fourth Acquisition - April 2015 - The Mint, Leeds; (27% of program) - SOLD
➢ 118,000 sqft modern office building located in Central Leeds, 94% let on acquisition to two tenants,
Asda and Dart PLC• Fifth Acquisition - Sep 2015 – Quattro (Basingstoke, Cardiff, Luton); (7% of program) - SOLD
➢ 68,000 sqft in three office buildings with 35% vacant space across to assets
21
UK Small Property Program (Fund IV)
Merin – sold (Fund IV)• Effectively a portfolio of 202 office and industrial buildings totaling 1.1 million sqm
across The Netherlands, along with its management business
• The acquisition was facilitated through the default of the CMBS vehicle (Opera-
Finance) in February 2012 which in turn led to the acquisition of the Class A bonds
(€360m), the subsequent enforcement of the senior loan and ownership of the
underlying assets, with the equity shares of the company Uni-Invest to follow
• Acquired in a joint-venture with TPG Capital, and financed by 60% vendor loan
from the existing Class A noteholders
• The 202 assets comprise of:
➢ ca 590,000 sqm of B-Class office space, with ca 47% vacancy
➢ ca 500,000 sqm of industrial and logistics space, with ca 20% vacancy
• Strategy includes:
➢ Disposal of well-let element of portfolio (14% by sqm) in the medium term
➢ Disposal of approximately (20% by sqm) of assets for land value less demolition
costs
➢ Increasing occupancy across 64% of the assets through selected refurbishment
of between €100-€300 psqm and lease up at rents of of €85 - €100 psqm p.a. for
offices and c. €40 psqm p.a. for industrial space, which represents ca 15 - 20%
discount to comparable assets
• First add-on acquisitions closed in December 2013 (MSREF - 3 properties, 43,000
sqm) and December 2014 (Trois - 3 properties, 18,000 sqm); other value enhancing
opportunities involving other large Dutch office operators are being explored
• July 2017 – sale of platform to Dream Global REIT
22
• Similar to prior funds’ programs, the focus is on building a balanced portfolio ofsmaller buildings and sub-portfolios of smaller assets that are typically a mixture ofpartially vacant, vacant or fully let, but requiring active asset management, includingrefurbishment and redevelopment, re-letting of vacancy and exiting
• First Investment: Mollstrasse; 23% of program SOLD
➢ Acquired in September 2011, a 15,900 sqm primarily vacant office and retailbuilding in the attractive central “Mitte” district of Berlin from a distresseddeveloper
• Second Investment: Ridlerstrasse; 17% of program SOLD
➢ Acquired in April 2014, a 11,200 sqm office building in Munich's West Enddistrict with 40% vacancy and capex requirements
• Third Investment: Campus West; 30% of program SOLD
➢ Acquired in October 2014, a 36,700 sqm office complex also in Munich butfurther west in an established B-office hub, with a diversified tenant base and20% vacancy
• Fourth Investment: Franklinstrasse; 30% of program SOLD
➢ Acquired in May 2015, a 51,000 sqm office complex in Berlin Charlottenburgadjoining Ernst-Reuter-Platz with the Technical University of Berlin in closeproximity. Business plan envisages redevelopment and lease up of 37,000 sqmof office space (95% of total lettable space)
23
German Small Property Program – sold (Fund IV)
Freehold
Leasehold
• Acquisition of 24 office, industrial and retail properties for a total
consideration of £184m located principally in London and South East
England.
• Assets acquired from a distressed CMBS vehicle which reached maturity in
October 2012 and was in LTV breach since 2007, owned by Henderson
Casper LP, a fund managed by Henderson Global Investors.
• Acquired in a 50:50 Joint Venture with Mountgrange Real Estate
Opportunity Fund with new senior debt financing from Santander.
• Simultaneously completed 9 asset sub-sales of assets to institutional
investors.
• Total 15 assets post sub sales at acquisition
➢ Offices (60%), Retail Warehousing (8%), Distribution Warehouse
(25%), High Street Retail (2%), Multi-let Industrial Property (5%).
• Transaction Strategy:
➢ Maintain and improve strong cash flow yields and lease up of the
lettable vacant space amounting to c.a. 100,000 sq. ft. of total area,
including select capex investments, to drive gross income yield
improvement – in progress and significantly completed
➢ Disposal program for stable and stabilized assets over a 4 year period
• All assets now sold
24
Mercury - sold (Fund IV)
• Acquisition of the Clarion Hotel in Dublin, Ireland. The Hotel had been in administration
for nearly 3 years and was underinvested with a poorly motivated management team and a
poorly performing brand. The Hotel was financed by a loan owned by the National Asset
Management Agency (“NAMA”), the Irish-state-owned ‘bad bank’, who was the ultimate
seller.
• Hotel is a modern (opened in 2001) purpose-built 165-room (consisting of 15 suites /
family rooms and 150 standard rooms) 4-star hotel fronting the River Liffey in the
International Financial Services Centre (“IFSC”) in Dublin. The Hotel benefits from 10
conference rooms (catering for between 10 and 150 delegates), a leisure club (including an
18m heated swimming pool; the leisure club has c.1000 members), two dining options and
a bar.
• The Hotel is held on a long lease (184 years remaining) from the Dublin Docks Authority.
The Hotel was previously managed by Choice Hotels Ireland and traded under the Clarion
brand. The Hotel benefits from a strong location in the IFSC (a successful financial
services hub).
• The operating partner in the transaction is Fitzpatrick Lifestyle Hotels (“Fitzpatrick”), an
experienced local owner and manager of mid-market hotels. Hotel is being run on an
independent basis, managed by Fitzpatrick, and rebranded as part of the Fitzpatrick
collection as The Spencer (as announced and launched in March 2014).
• A key part of the business plan was the investment within the first six months of
ownership to refresh the guest rooms, update the health club and the public areas,
including full relaunch of the food & beverage outlets – completed and full launch took
place in July 2014
• Sold November 2016
25
The Spencer - sold (Fund IV)
Badby Park – sold (Fund IV)
26
• In 2012 Patron acquired the Badby Park Care Facility which is set within a
57-acre estate located in Daventry (Midlands, UK). Badby Park comprises
a 68 bed facility dedicated to acquired brain injury, complex care and
neurological disorders providing specialist nursing and rehabilitation
services.
• A further development in Stoke-on-Trent was acquired (75 bed specialist
facility, 24 apartments and 60 bed care home) in March 2015. The 75 bed
specialist unit opened in October 2015 and is currently in “fill” mode
• Worcester (Worcestershire) exchanged in April 2016 subject to planning
• Middlesbrough (40 beds) and Darlington (54 beds) acquired Q4 2016
• 2 further sites, Southampton and Basingstoke, exchanged in November
2016 subject to planning
Strategy Includes:
• Increasing revenue and managing staff agency costs at Badby Park at
mature occupancy
• Exploring the development potential from the excess land on the site and
bolt-on acquisitions - planning consent for 17 bed extension was granted
in 2015
• Fill Stoke, Middlesbrough and Darlington facilities and achieve planning
on exchanged sites
• Operating facilities (Badby, Stoke, Middlesbrough and Darlington) sold
April 2017 – pipeline sites transferred to UK Care Home Program
• Acquisition of budget youth hostel accommodation portfolio and themanagement operations from family owned business based inLondon, with properties in London and Berlin:
➢ The Generator Hostels Ltd: operating company and allintellectual property including brand name “Generator Hostels”
➢ London Freehold: 872 Beds (60,000 ft²), which has nowcompleted a full refurbishment to bring rooms and public areasin-line with newer properties.
➢ Berlin Leasehold: 892 Beds (80,000 ft²)
• Further hostels acquired since initial acquisition and now operating:Copenhagen, Dublin, Hamburg, Barcelona, Berlin Mitte, Venice andParis
• Newest assets Amsterdam and Stockholm opened in H1 2016
➢ Rome in Q3 2016
• Sites recently acquired: Madrid and Miami – both under developmentto open in 2017
• Active pipeline of hostels within Europe and North America –includes freehold, leasehold and management contracts
• Sale exchanged March 2017, completed May 2017
27
Location Tenure Opening Beds RoomsAvg Beds
Per Room
London FH 1994 872 212 4.1
Berlin East LH 2002 892 235 3.8
Copenhagen FH 2011 662 175 3.8
Dublin FH 2011 539 106 5.1
Venice FH 2011 684 161 4.2
Hamburg FH 2012 235 29 8.1
Barcelona FH 2013 727 154 4.7
Berlin Mitte FH 2013 568 146 3.9
Paris FH 2015 917 199 4.6
Amsterdam FH 2016 566 168 3.4
Stockholm LH Jul 2016 826 233 3.5
Rome FH Q3 2016 244 75 3.3
Madrid FH H2 2017 532 128 4.2
Miami FH H2 2017 358 101 3.5
Total 8,622 2,122 4.1
Generator Hostel Program – sold (Fund III)
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• Capital Park platform was acquired in 2005 with the acquisition of Neptune portfolio (42 assets including redevelopment of selected assets as retail / residential)
• Portfolio expanded to encompass 100 assets with a variety of strategies including
➢ Retail – program to acquire small assets on high streets in Polish
cites to refurbish, relet and exit
➢ Opportunistic – property assets, including land, for refurbishment
and development for residential and office use (including Wilanow
– 37,000 sqm)
➢ Eurocentrum (69,000 sqm)
➢ Norblin (centre Warsaw, > 64,000 sqm)
• After disposals, Portfolio now comprises over 62 assets, representing 249,000 sqm (inc. development potential)
• Platform restructured in 2011 to create independent Polish corporate entity, called Capital Park SA
• Company comprises over 60 staff, encompassing all aspects of investment management, and property development including origination, financing, project management, and tenanting.
• IPO on Warsaw Stock Exchange in December 2013 raising over €30 million in primary capital for growth and business plan execution
• Focus on improving share prices through business plan execution
• In May 2019, sold 90% of position to Madison International Realty; residual portion held with a deferred put option
Capital Park - sold (Fund III / Fund II)
• Acquisition of portfolio of mid market regional UK hotels (2,861 rooms) from theadministrators to Jarvis Hotels Limited by a newly established entity, Jupiter HotelsLimited
• Acquired:
➢ 21 properties on a freehold basis and 5 leaseholds and the operating company
➢ Post re-structuring; now branded Mercure (Accor franchised hotels)
• Acquired in joint venture (50:50) with West Register, Royal Bank of Scotland’s vehicle foracquiring real estate assets from defaulted RBS loans.
➢ First joint venture deal undertaken by West Register
• Jarvis had been in financial distress for 3 years. The acquisition of the business via a pre-packaged administration sale addressed a number of these issues immediately, i.e.:
➢ Over leveraged balance sheet: debt reduced by half (via write-off and cash equity) andprovided on attractive terms - post re-structuring LTC: 64%
➢ Loss-making leasehold properties: 15 leases not transferred to Jupiter (handed backto landlords) and 3 transferred with lower rents
➢ Poorly performing brand (Ramada): new franchise agreed by Jupiter with Accor,under the Mercure brand
• Strategy includes:
➢ Using the Mercure brand to produce an uplift in hotel performance
➢ Significant head office cost savings achievable in the short term by restructuring thehead office given reduced size of portfolio under management and a much smallersales and marketing function due to far higher sales support from Accor
➢ Capex program of £9m over next 2 years to address property related issues inaddition to ongoing FF&E expenditure to support performance growth
• Sold October 2015
Jupiter Hotels - sold (Fund III)
Leasehold Asset*
Freehold Asset
*Bristol asset now freehold
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• Acquisition of a complex of 5 connected commercial real estate
assets in central Manchester, UK, held on a long leasehold basis
• Complex includes:
➢ The world renowned 21,000 person capacity MEN
entertainment arena, the second largest indoor arena in the
world based on 2009 ticket sales
➢ 149,000 ft2 of office area in two buildings
➢ Retail elements
➢ c.a. 1,250 space car park structure
• Very strong local partner Development Securities PLC (publically
listed property company) with considerable experience and first
rate reputation
• Strategy Includes:
➢ Renegotiation of the main Arena lease with the current tenant
creating a more stable and safe income stream – completed
➢ Agreement of a new Naming Rights deal to replace the
current deal at a higher level – completed
• Sold in October 2013 to UK property fund
Car ParkMartin House (Office)City Square (Retail)MEN ArenaArena Point (Office)
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Manchester Arena Complex - sold (Fund III)
Poblenou - sold (Fund III)
• Acquisition of 3 residential blocks of apartments in
Barcelona from local developer Habitat (recently
emerged out of insolvency proceedings), comprising:
➢ 208 flats of 1, 2 and 3 bedrooms (14,700 sqm)
➢ 6 retail units (600 sqm)
➢ 230 parking spaces and 14 storage rooms
• Strategy is to sell individual units to tenants, new
occupiers and investors at a significant discount to
market prices (20%-35%%)
• Asset liquidity provided by (i) very good product
quality; (ii) strong location within Barcelona; (iii) micro
market with favourable supply/demand dynamics; and
(iv) attractive sale prices
• Asset management team has proven track record
(same base team as Patron’s Fund II BCN-2 deal)
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• Acquisition in mid 2005 of a portfolio of eight buildings /
assets in France
• Office portfolio – three in and around Paris, one in Lille
• Leisure portfolio – two large Center Parcs, and two smaller
hotels in Courchevel
• Taken public as Vectrane, a French SIIC
• Investment activity included:
• Acquisition of additional office building in Lille and leisure
complex on the Alps
• 2 smaller assets (French Alp Hotels) sold to tenant (Pierre &
Vacances)
• Commencement of major renovation of Tour Anjou
• Sold entire shareholding (78%) to Eurosic in March 2007
Jesta / Vectrane - sold (Fund II)
• UK’s leading independent bulk liquids and gas terminal operator
and manager – warehousing
• Operated out of 7 sites with 500 bulk liquid and gas tanks and 1
million m3 capacity, handling in excess of 4 million tonnes per
annum
• Customers primarily blue chip international oil & petrochemical
companies
➢ Majority of income (approximately 70%) operating under
long-term agreements (up to 10 years), or stable relationships
(many over 20 years)
• Traditional US risks either non-existent (non-practical) in UK or
covered by insurance
• Approximately 400 employees
• Transformed largely dormant chemical business to become the
leading provider of storage and infrastructure in the UK for
biofuels
• Exited the business late 2005 to Inter Pipeline Fund
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Simon Storage - sold (Fund I)
TyneCumbria
Shannon
Seal SandsRiverside
Immingham
Antwerp
Rotterdam
Legend
Refinery
Simon Storage Facility
TyneCumbria
Shannon
Seal SandsRiverside
Immingham
Antwerp
Rotterdam
Legend
Refinery
Simon Storage Facility
Legend
Refinery
Simon Storage Facility
Immingham Terminal
Seal Sands Terminal
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Hotel ArtsHotel Arts
Office BuildingOffice Building
Land PlotLand Plot
Retail & casino
area
Retail & casino
area
ApartmentsApartments
Hotel ArtsHotel Arts
Office BuildingOffice Building
Land PlotLand Plot
Retail & casino
area
Retail & casino
area
ApartmentsApartments
• Parent company (Sogo) went bankrupt forcing liquidation
• Assets trapped in complex corporate structure with management
contract on hotel
• Considered to be one of the best Ritz Carlton’s in the world
• Via corporate investment, acquisition of mixed use portfolio of
approx. 1.2 million square feet) consisting of:
➢ 44-story, 482-room, 5-Star Hotel Arts
➢ 12,375 sq.m Office Building
➢ 13,084 sq.m Retail Building
➢ 3,611 sq.m Land Parcel
• Deal won “International Hotel Deal of the Year” in 2001
• Harvard Business School case study notes its success despite
adversity
• Over 400 employees
• Majority sold in 2004, while retaining minority stake
• Final Exit in August 2006 to a Host Hotels & Resorts led investor
consortium
Arts Hotel Complex - sold (Fund I)
igroup – sold (Fund I)
• One of the leading players in the subprime UK mortgage
market
• One of the largest MBOs in the UK for 1999
• Growth from £450m to £1.6 billion in assets; growth
from £30m to £105m+ a month in originations at sale
• Company grew from 300+ to 800+ employees
• Equity partners include Royal Bank of Scotland (£76m)
and management
• Sold to GE Capital in 2001 and continues to be leading
performer
• Exit won “British Venture Capital Association Deal of the
Year in 2001”
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Patron Capital Partners
One Vine Street
London W1J 0AH
Tel: +44-20-7629-9417
www.patroncapital.com
Contact Details