Patron Capital targeting Germany with €1bn fund

UK-based private equity firm Patron Capital Partners sent out very strong signals recently that it plans to significantly boost its investment levels in Germany over the next two years. The opportunistic investor has largely been familiar to German investors in the past through its accumulation of run-down railway stations across the country.

The company’s Patron Fund IV raised about €1bn last year to invest in distressed real estate and related companies across Europe, and said about half of that has already been invested.

CEO and founder Keith Breslauer said in a recent statement that Germany is going to be very much in the focus of Patron’s investing targets over the next couple of years. “We have a strong appetite for real estate in Germany and are dedicated to spending considerable amounts of our investment capital and internal capacities on opportunities in this region,” he said. The company recently hired Georg von Hammerstein, the former chief investment officer for Pramerica Real Estate Investors’ European operations, to help source investment in German-speaking Europe.

Patron already manages more than 550,000 sqm of land and buildings in Germany, including office buildings throughout Berlin’s Mitte district and other office centres close to larger cities, a hotchpotch of nearly 1,000 railway stations and adjoining land that were a big part of the company’s development plans several years ago, and a chain of budget youth hostels operating under the Generator name

The Patron stable of funds tends to focus on distressed and undervalued middle-market assets, often in the hotels, leisure and healthcare sectors, with a typical equity commitment of between €30m and €90m. The funds generally target a 17% to 22% gross IRR, and a 1.8x to 2.2x gross equity multiple on invested capital over a three to five year investment period.