21 May 2015 – Expansión
The founder of the American fund boasts a fortune of 4 billion euros and a 20% return on investments over two decades thanks to his commitment to non-performing loans.
The US fund, Lone Star, is the largest property developer in Spain. It has also become the country’s largest landowner after acquiring Neinor from Kutxabank, for 930 million euros and investing another 300 million in purchasing land from developers and other financial institutions.
This operation is not Lone Star’s first incursion into the Spanish market. In May 2014, the company purchased a portfolio of subprime loans of the German bank Eurohypo for 3.5 billion euros (two-thirds of its nominal value). These loans had numerous properties as collateral, such as the Dolce Vita shopping malls in A Coruña, Zielo Shopping in Pozuelo (Madrid), and H2O in Rivas (Madrid) as well as debts of hotels like the Gran Melia Fenix and the Ritz in Madrid.
Since its founding 20 years ago, Lone Star has raised 15 funds with a total volume of about 60 million dollars. But who is behind the new king of the Spanish real estate sector? The chief executive of Lone Star – John P. Grayken who, according to Forbes, has a fortune of 4 billion euros.
Approaching his 59th birthday (on June 1), Grayken lives between the US and UK, the latter being his home since 1999, when he renounced his US citizenship. He currently holds Irish nationality after marrying a British woman.
Raised in Boston, Grayken began working in the real estate division of Morgan Stanley after graduating from Harvard Business School. In the early 90s, he met Texas billionaire Robert Bass, with whom he began working on problematic mortgages and other failed loans at Brazos, a firm created by Bass and the US federal agency Resolution Trust Corporation.
Back in 1985, Brazos Partners played a crucial role in the launch of Lone Star and another one of Grayken’s companies, Hudson Advisors, currently responsible for asset management of the fund’s purchases in many countries, including Spain, where it has its own team.
In 1993, Brazos Partners owned about 1,300 assets from the ‘bad bank’ which was created back then to bail out US banks at the time. Two years later, the company was successfully liquidated and Grayken managed to invest another 250 million dollars in debt and real estate in North America.
During its first years, Lone Star focused its investments mainly in Canada. Soon after, the fund began moving its gaze towards Asia and Europe. Between 1998 and 2004, it invested primarily in Japan, Korea, Indonesia and Taiwan.
In 2005, Grayken started investing more in Europe, buying debt and assets from the financial restructuring being undergone by banks throughout the continent at the time.
Over the past decade, Lone Star has increased land purchasing and housing development in markets like the UK and Germany, as well as the US. After strengthening their position in these markets, in 2011 Grayken and his fund started focusing on Spain, where, after studying multiple transactions, they have just made their great landing.
Original story: Expansión
Translation: James Leahu