In its short two-year history, Henderson Park Capital has built a formidable base, acquiring US$3.3 billion on 13 properties, a mix of office buildings, hotels and residential rental construction. The firm’s first score was the largest hotel in Paris, the recently refurbished, 1,025-room Meridien Etoile, bought for €365 million (US$414 million).
Henderson Park followed that up with the shuttered Ledra Marriott (now the Hyatt Regency) in central Athens, bought jointly with real estate firm Hines at auction; two of the U.K.’s largest convention hotels, the London and Birmingham Hilton Metropoles; and the historic Westin Paris-Vendôme, which it plans to redevelop and will reopen in 2022 jointly with Jumeirah.
Henderson Park’s preferred hospitality niche, as early activity suggests, is high-profile assets located in European gateway cities — hotels that need a little love, founder Nick Weber says. “We try to find assets that for one reason or another have perhaps been underinvested, not managed as aggressively as they could have been or in need of a greater transformation through a brand change or redevelopment,” he explains. A history of strong cash flow is another plus.
Hotels represent only about a quarter of Henderson Park’s portfolio, and their primary appeal for Weber is simple: cash flow. “Our two U.K. Hilton hotels generate over £100 million (US$129 million) in annual revenue, and the Meridien Etoile delivers around €80 million (US$91 million),” he says. “We always anticipate some capital gain, but if you run a hotel well it can often generate a pretty nice cash flow for investors.” The downside, of course, is market fluctuations — Brexit, or another SARS-type outbreak, for instance — that impact travel. “It’s not like owning an office building with a single tenant like an IBM or other multinational that pays you every quarter,” he says.
But Henderson Park is insulated more than some funds because of a conservative mindset. Its deals depend less on leverage — about 60% to 65%, Weber says — and skew toward high-quality properties in major European cities. “You still need to work hard and perform, but you’re not going to lose your asset if you follow those rules.”
After a flurry of activity in 2017, last year was relatively quiet for Henderson Park. But Weber expects that to change. Lately he has been drawn to student housing, and he is weighing potential expansion into hotels in Spain, where the firm has office and student housing holdings, and Germany. “We have five hotels now. Could we own 10 or 15 in the next five years? Sure, but only if we see the right opportunities for us. We have plenty of capital to grow, but it’s really situation-led.”