Nick Weber talks to PropertyEU about his unexpected journey from Princeton graduate to CEO and founder of real estate private equity firm Henderson Park.
There is nothing in the immediate family tree of Nick Weber to suggest he would become the founder and CEO of a headline-grabbing private equity real estate firm.
The 47-year-old American grew up in Bergen County, New Jersey, as the son of doctors; His father was a diabetes researcher and surgeon while his mother is a French-born PhD microbiologist. His brother, Scott, is president of Interpeace, a non-Government liaison services (NGL) which was started by the United Nations in 1994 as the ‘War-torn Societies Project’. He has another brother, Eric, who has a PhD and is a professor of philosophy and public policy at a leading US university.
‘I am the black sheep of the family,’ he quips, as he explains from the boardroom at Henderson Park’s offices near Victoria the somewhat haphazard manner in which he started a 25-year career in financial investing that led him here. ‘Each member of my family has their calling and they are doing amazing things in the world. I just found myself following a different path.’
Manhattan in the 1980s and 90s played a big part in his life. Every day he would ride the school bus or carpool for an hour and a half to the east side of Manhattan from his hometown in Leonia, New Jersey, to attend the Lycée Français. Recalling his days as a young student, he found it exciting to be in New York City. As a student, he describes himself as someone who was not terribly well read or interested in literature or history, but “decent” at maths, physics and chemistry. He followed that interest and ended up going to Princeton University to study chemical engineering.
It was 1994 when he graduated into a tough jobs market. However, armed with an engineering degree he was at least able to put himself forward not just for engineering jobs but a host of other positions as well. At the college careers’ office, he would stuff letters into envelopes declaring his interest in various companies, and they would be mailed out. Sometimes, the companies would arrive on campus to interview students. A lot of interviews ensued, but he found it hard to get excited by positions working on the design of the next nozzle for toothpaste or working for a large paper manufacturing company. Neither did he want to study for a PhD.
He took some interviews with management consultancy groups and a large trucking logistics company, but nothing clicked with those either. Next, he attended a career services fair at the college gymnasium. In attendance was a company Weber had no idea about. He flipped his résumé onto a pile as a scrum of people tried to speak with some young, suited representatives of the company.
Somehow, he was called to interview, and made it through to a second interview and the multitude of interviews that followed. He was still mystified by the company and by other candidates who carried copies of a pink financial newspaper. In the end, this financial company offered him a position as an analyst, which he accepted. This is how Weber found himself travelling to 85 Broad Street in Manhattan every day to work for Goldman Sachs.
Weber assumed he would only stay at Goldman Sachs for a couple of years and then work out what he really wanted to do with his life. But he found the life exciting. It was the ‘good old days’ of using Unix key stroke computers before the mouse or Excel spreadsheets had been invented. Folks were using YAMS – an early internal messaging system in the days before email, and out on the trading floor, traders were animatedly walking around their desks with phones with cables that could reach 20 strides in either direction.
He worked hard, learnt on the job and kept improving his skills and knowledge. ‘I was driven to want to work with smart people and do something exciting, and being on Wall Street as a twenty-something person was pretty exciting,’ he says.
‘I loved my time at Goldman,’ he states. Steven Mnuchin, current US Secretary of the Treasury was at one point his boss when he ran the mortgage department. Goldman Sachs was an active buyer of distressed real estate mortgages from the Resolution Trust Corporation (RTC), the asset management company the US government had set up to liquidate loans post the Savings & Loans Crisis that blew up in the late 1980s and rumbled on through the early 1990s.
This is how Weber cut his teeth in real estate, buying distressed assets from 1994 to 1996. In 1997, it was the start of the Asia financial crisis and a year later in 1998 Russia defaulted on its sovereign debt. In the midst of this, Goldman Sachs saw a chance to originate opportunistic mezzanine real estate debt investments. To do so, Weber’s team set up Archon Capital, which still exists today as Goldman’s mezzanine lending platform in the US.
In 2000, Weber transferred to London to build the firm’s mortgage department. In 2002, he relocated to Hong Kong in Asia, and returned to London in 2004 to create the European special situations business. In 2006, aged just 34, he made partner.
After 14 successful years at Goldman Sachs, Weber finally left the firm to run the European real estate business of Mount Kellett Capital Management, a start-up launched by former Goldman Sachs star Mark McGoldrick. Sadly, Mount Kellett ran into trouble over oil and gas investments and was merged with Fortress Investment Group in 2015, but the European real estate investment track record was stellar enough for Weber to leverage when he decided to subsequently launch his own real estate business, Henderson Park.
Over the course of just three years, Henderson Park has become one of the most eye-catching new firms in European real estate, this year closing the largest ever first-time real estate fund at $2.2 bn (€1.95 bn), surpassing that of the previous record-holder almost twofold.
There have been a number of high-profile deals, most recently, the announcement by Ireland’s Green REIT that Henderson Park’s €1.34 bn offer to take over the publicly listed company has been recommended by the firm’s independent board of directors.
So far, so good for the boy from New Jersey as he continues to build the business, which has grown to 32 people.
‘One of the things that keeps my job exciting is that no two days are ever the same. That is what keeps it fun. Some days it is problems and others it is opportunities, but that curiosity I had as a kid and that energy, I still have.’
Interviewee turned interviewer
Given Weber’s early experience of being interviewed multiple time for jobs, how does he approach interviewing people for Henderson Park?
It is a question that reveals something of how the firm works and about Weber as a manager.
‘You really want to know firstly what kind of person or character they are. Then you want to focus on whether they are a team player in terms of style. We do not accept sharp elbows. This is a team sport. There is also no such thing as a dumb question here. This is a place where we want inquisitive, hard-working, passionate people. I don’t really care how much experience someone has. It really comes down to how excited they are to learn, how much of a sponge they are, and how willing they are to put in the work.’
But, he says: ‘Interviewing someone is not like negotiating a deal, it’s about firm culture. That said, we are not sitting here singing Kumbaya by the fire. This is a transactional business. It is not a stress-free environment; we are handling and worrying about other people’s capital more than our own. We have extreme fiduciary obligations to do the right thing at all times,’ he says for emphasis. ‘At the same time, you have to teach and give rope to young people. If I am hiring at mid-level, I need to make sure they have the skillset to teach those around them. Corporate culture is more than just doing a deal.’
He continues: ‘Each Monday, we sit as an entire firm for two or three hours, talking about asset management, operations, acquisitions, fundraising and so on. We go through everything going on at the firm. It is way for everyone to feel part of it, particularly so early on in a firm’s life. You want young people to have visibility across all aspects of the business, and to create a platform where everyone can learn through one another’s experiences. Every week we get some really interesting questions. For the team to be able to talk through these with the likes of our head of acquisitions, general counsel or CFO is great for a young person who wants exposure to everything that is going on. We also want our investors to feel like they can pick up the phone to anyone on the team.’
Henderson Park’s modus operandi
It is no surprise that Henderson Park is agnostic when it comes to real estate deals. A large chunk of Weber’s career has been spent working on an eclectic range of asset classes both debt and equity from classic brick deals to corporate and operational real estate. While at Mount Kellett, for example, he acquired Jury’s Inn hotels. At its peak, the hospitality group had grown to £1 bn of assets with £670 mln of debt, but ran into difficulty, Mount Kellett bought it for £360 mln investing £120 mln of equity and borrowing £240 mln of seller-financing from the banks.
Mount Kellett restructured the company and just 23 months later exited for £680 mln to Lone Star Funds producing a reported 90%-plus IRR and 3.25x equity multiple. Hotels represent around 25% of Henderson Park’s deals, with some very high-profile assets in the portfolio, such as the Westin Paris-Vendôme in Paris which was bought from GIC for €550 mln in December 2017.
Apart from hotels, there have been some interesting office acquisitions. One arrived in 2018 when Henderson Park acquired 66 Shoe Lane in London for £101 mln (€114.5 mln) from Commerz Real. The German fund manager had owned the office building known as Athene Place via a core fund since 2008. Though Athene Place is excellently located opposite the new European headquarters of Goldman Sachs, the tenant Deloitte was indicating it wanted to exercise a break option on its 15-year lease with five years still remaining; this prospective void meant it no longer seemed a natural fit for a core fund.
With a guide price of around £120 mln, a formal sales process floundered, perhaps given a lack of confidence in the market at the prospects of reletting a building that required refurbishment amid Brexit. However, Henderson Park did not believe a building in such a location would remain empty, so it tied up a deal months after the formal sales process failed. Having acquired it for a discount to the initial asking price, Henderson Park embarked on a refurbishment of the building Weber says has ‘excellent bones.’
In October 2018, only three months post Henderson Park’s acquisition, the story took a twist when Deloitte agreed to reoccupy the building, taking 50% of it on a new 15-year lease. With rumours rife that Deloitte might also be taking the other 50%, this London Brexit office bet could produce spectacular returns for investors.