If the commercial real estate industry has significantly stepped back from development drives in recent times in the light of macroeconomic challenges, nobody told CBE Capital. The London-headquartered real assets merchant bank recently led a club-deal investment into a Six Senses resort and branded residences scheme to be developed in Porto Heli on the Greek mainland, leading on from other successful projects.
The €150 million development in Greece is being financed by equity investors including the Greek Goutos family, New York-based fund Taconic Capital, London-based Cedar Capital Partners, and CBE Capital. According to Geza Toth Feher, managing partner of CBE, the project is among the first institutional-level investments in the Greek hotel sector led out of the UK.
“We are able to bring an Anglo-Saxon investment style to countries that are not used to such,” Toth Feher tells Hospitality Investor. “That said, Greece has fully emerged from the Troika banking supervision era and is taking a pragmatic approach to foreign investment. The government’s average age is refreshingly younger than in other countries, and you can even write to the tourism minister on LinkedIn - and get a reply!”
Senior finance
CBE’s founder recounts how he connected with the Greek Goutos family while the firm was examining another deal in Athens. “It’s a country which is open to external investment and ready to co-sign deals,” he adds. “The Goutos family is the equivalent of the Aga Khan in the 1960s and 1970s with a tremendous appetite for complex schemes and the vision to carry them out. With us acting as lead investor, we also convinced New York’s Taconic Capital to participate with an equity investment. The opportunity of securing a good level of senior finance sends an important signal to international investors.“
“These sort of developments are not happening in markets like the UK and Germany at the moment, with all the uncertainty around interest rates and inflation,” he adds. “Our focus on high-yielding opportunities in Italy and Greece is really paying off.”
CBE has in fact shown that finance can be found for new schemes in current times – if you’re looking in the right places. The Greek deal follows landmark signings in Capri and Rome, Italy, which have helped to put CBE on the map as a facilitator for luxury hotels. In Capri, CBE engineered a joint venture between RB Capital and German operating firm Oetker Collection to relaunch the island’s oldest hotel, formerly known as Locanda Pagano. The Reuben Brothers picked up the 1822-hotel in liquidation during the pandemic, before partnering with Oetker for its grand reopening as La Palma in 2023. Another scheme which has brought CBE’s dealmaking up to around €1 billion in recent times is that of the redevelopment project for a new Corinthia hotel in Rome. This is another Reuben Brothers-backed property which is set to launch in the Italian capital in 2025 in a former bank headquarters just off Via del Corso.
Evolving strategy
The German national, who resides in Rome, is equally at home on the Continent and in London, having established CBE in the British capital in 2009. However, the firm’s strategy has significantly changed over the past decade, as Toth Feher explains from his office in Mayfair. “We initially planned to become a conduit for Anglo-Saxon style capital to my home country of Germany, or bring capital out, in the immediate aftermath of the Global Financial Crisis. But our primary focus was retail at that time,” he underlines. Alongside Topland, CBE invested some €2 billion into German retail in 2011, one of many successful deals in the space. But matters came to a head in 2016, in more ways than one. While the year was marked by an impressive transaction for 67 M&S stores alongside private equity giant Fortress, the Brexit vote also sounded alarm bells for CBE. “It was time to rethink. The UK looked very expensive, and a general paradigm shift was happening,” he notes. Having a house in Rome, Toth Feher had an inkling that he could find better yield in Italy. “Accordingly, right before Covid, we made a conscious decision to focus on Italy, and as hospitality is a winning sector there, that was a natural evolution.”
Once established in Italy, Toth Feher says that through “great friends, the Reuben Brothers, we were able to do nice deals in Capri and Rome”. While, in Capri, he was able to exploit his German connections to bring the Oetker Collection on board. Rome was a natural next step in the light of the city’s fresh appetite for luxury hotel development. “I personally negotiated the deal for the former Banca Italia headquarters with Banco Popolare di Milano,” he says. “It’s a stunning property with original frescos of all the governors of the Bank of Italy on the walls - and there have been a lot!”
Future plans
Leading on from that, Toth Feher says that “we quickly realised that all the investment firms that were looking at Italy were considering southern Europe as a whole, so there was the opportunity to move to Greece next”. Accordingly, the deal for the Six Senses Porto Heli was born.
Located in two private bays in the municipality of Ermioni, close to the islands of Spetses and Hydra, the Greek property is set to open in 2026. It will offer around 60 rooms and suites, most with private plunge pools and private terraces or gardens, plus a three-bedroom retreat villa. On top of that, the scheme is set to include some ten branded residential villas for sale, ranging from five to eight bedrooms.
CBE likes branded residences, says Toth Feher, for their ability to augment the returns on development. “It is hard to make money in luxury hotels,” he says with surprising frankness. “Clients are extremely demanding in the luxury space and want the best of the best, all of the time. So you need to add something to the business that makes more money. Essentially, the for-sale residential component subsidises the hotel.”
“We are still in the early days of branded residences in Europe, but we are learning from the US and Asia, from successful schemes in places like Miami, where the residences are what make the overall investment very interesting.”
To build on its hospitality strategy, CBE has appointed UBS to raise up to €400 million in additional equity from a small number of institutional investors for its pipeline of investments in ultraluxury resorts, hotels, and branded residences. He says: ”UBS understands our investment product and competitive edge in high yielding markets such as Italy and Greece and we are glad to have them approach their clients on our behalf.”
Going forward, we are likely to see more of the same from CBE. “If fundraising goes to plan, we will be able to execute a pipeline which includes projects in Marrakesh in North Africa and North Beach in Miami, another project in Capri, and another one in Greece,” Toth Feher confirms. “Watch this space!”