Investor starts a restructuring to turn around loss-making fund manager
Internos Real Investors last week embarked on a 90-day plan to start turning round loss-making European property fund manager GPT Halverton.
In its ﬁrst deal since Jos Short and Andrew Thornton launched the ﬁrm in early 2008, Internos acquired GPT Halverton debt-free for a nominal €2 and received €7m of working capital.
“Hopefully we have bought the business at the bottom of the market with quite a dowry,” said Internos’s Short. Australian listed property trust GPT bought Halverton Real Estate Investment Management in 2007 at the top of the market intending to build it up.
But in August it announced it was selling the European arm after writing its value down to zero and as a condition of raising new equity after battling to rebuild its own balance sheet.
Short said the priority was to stabilise the business, reassure its 100 staff and communicate the vision for the business: “Its ownership was in doubt because its sale or liquidation was a condition of GPT’s rights issues.”
The value of the business’s assets under management has fallen from €3bn to €1.7bn and Short said the next priority, after the restructuring, would be to build up assets under management again.
“If we can get it back to €3bn under management, it will be proﬁtable, said Short. “We want to carry out further restructur-ing and growth through new funds, expanding existing funds or putting other deals through this platform.”
Short will become chairman, Thornton chief executive and GPT Halverton’s chief ﬁnancial ofﬁcer, Richard James, will ﬁll the same role; GPT Halverton’s chairman, Jonathan Johnston, is leaving to return to Australia.
Short said decisions had not been made about the rest of the management, who include investment director James Buckland, and David King, who joined from Credit Suisse in April to replace Halverton’s founder, Richard Croft.
They have yet to decide whether to keep all ﬁve ofﬁces, in London, Amsterdam, Berlin, Frankfurt and Luxembourg.
GPT’s five major vehicles
GPT Halverton manages ﬁve, closed-ended funds with assets worth about €700m. “There is a lot of debt at fund level and some are in better shape than others,” Short said.
The funds are: The Dutch Active Fund and German Retail Property, owned by institutional investors; German Ofﬁces, owned with investors advised by JLL Corporate Finance; EIRE, a fund for clients of Citibank, which owns German ofﬁces; and Benelux Industrial Property, whose investors are clients of CBRE Investors, including CBREI’s Alpha Fund.
GPT Halverton also has the mandate to advise HBI, which has about €1bn of assets, including a large industrial fund. A sale of the fund’s 63 industrial estates to AIM-listed German investor Sirius has just fallen through.
BGP, the GPT joint venture that went sour after partner Babcock & Brown went bust, has an interest in HBI.