Limestone Capital’s Value Investing Strategy –


Value can be created in any type of real estate investment, said Benjamin Habbel, founder and CEO of Limestone Capital. “But you have to be disciplined and true to your thesis,” he added.

Contributed by Josiah Mackenzie

For Habbel, this thesis is about how affluent millennials will be the highest spending group of travelers over the next 10 to 20 years, and the hospitality companies that will make the most of this opportunity need to build differently. To do this, he draws on his experiences before becoming a real estate investor.

After working as chief of staff for Marissa Mayer at Google, Habbel launched Voyat, an e-commerce company serving the hospitality industry. “Working with 200 operators and owners, we had a good idea of ​​what was happening in different parts of the market – from Asia to Europe to the United States, from large-scale operators to small shops and everything else,” he said.

“We reviewed the logs and studied the PDFs. We knocked on doors and entered buildings. We vetted properties in a way that big money managers would tell me we’re crazy to do because it wasn’t scalable in their view. -Benjamin Habbel

Limestone Capital, with offices in Zug, Switzerland, Lisbon and London, was set up in 2018 to put money behind the opportunities it saw. Over the past four years, the company has acquired eight properties which have been assigned to its Aethos brand. Their value creation strategy guides their approach to procurement, organizational structure, renovations and operating culture.

Creating value through deal sourcing

The first step to achieving superior investment returns is an investor’s ability to find deals. For Habbel, finding the right partners for Limestone was important. In addition to him, there are three other general partners in the firm:

• Jeff Coe, co-founder of Limestone and former partner of Habbel at Voyat
• Alexander Schütz, CEO of quantitative asset manager C-Quadrat, with $9 billion in assets under management
• Christian Angermayer, who runs his family business and merchant bank with $3.5 billion in assets under management

Between the four partners there are decades of experience and relationships, providing a unique deal flow. For example, a member of the Habbel club community worked with a family that had financial problems but did not want others to know about it. They needed to work discreetly with someone with capital in a way that a traditional real estate fund could not. “That kind of access is important,” Habbel continued.

Proprietary networks are important, but you get no value from them if you don’t put in the work. “I’m not sitting in a glass tower in London. I was in Venice yesterday. Jeff is in Turin today. I am in Rome tomorrow. We meet architects and notaries. We have a different work ethic coming from the world of tech startups because we’re entrepreneurs and it’s our business.

While others have slowed down over the past two years, Habbel and the Limestone team have been working hard. “I probably racked up more miles during the pandemic than other investors before the pandemic,” he said.

Before acquiring an asset in Lisbon, Habbel said he examined 45 buildings. “We reviewed the logs and studied the PDFs. We knocked on doors and entered buildings. We checked properties in a way that big money managers would tell me we’re crazy to do because it wasn’t scalable in their view,” he explained.

Limestone will only do three or four transactions a year. “There are only a limited number of hotels that we can launch and be truly authentic and deeply involved in design and architecture,” Habbel added. “For this reason, we don’t mind being extremely hands-on every step of the way.”

Creating value through vertical integration

Limestone Capital’s vertically integrated approach – they own and operate their assets under their Aethos brand – offers another way to create value.

This involves identifying the right properties. “When we review offerings, we know our clients on a level that other investors don’t,” Habbel said. “We know what kind of terrace they want. We know the type of bar and restaurants they like. We know the exact vibe they need. This helps Limestone filter out offers that may be good but irrelevant to their audience.

Vertical integration also helps align their teams. “We already have a team of architects, designers, interior designers, decorators, engineers and project managers who all know the brand inside out,” Habbel said. “They’ve probably heard hundreds of meetings where we talked about the brand and let everyone know what we’re building for. So it becomes a very efficient process.

Aethos Ericeira in Encarnacão, Portugal

Finally, vertical integration offers flexibility. “We can be very creative in our choices. We are not dictated by a third-party operator who has a very different mindset and very different incentives,” said Habbel. “They may not care about the same things we care about. They have a very different program, and unless someone pays us a massive lease where we’re secured, where they take the risk, why would we give any of our properties to an operator who gives us a management ? »

Owning and operating their hotels increases Limestone’s ability to create a superior guest experience. “These two capabilities together are a real differentiator that the vast majority of funds don’t have,” boasted Habbel.

Creating value through renovation

Having these teams of people aligned around a common vision of hospitality helps create value in the renovation process. “It’s very different from other investors,” Habbel said. “We’re very good at taking broken real estate and turning it around.”

An example is their new surf club in Portugal. The property was once a home for the elderly in an amazing location on a cliff. But it was too far from anything for the owner’s needs. The owners eventually went insolvent and the asset had much more potential as a lifestyle surf resort. “We’re able to take something like this that’s broken because it was mispositioned, put a significant amount of CapEx in it, and then turn it into something else,” Habbel explained.

Limestone and its consumer brand, Aethos, have brand standards, but they are different than most owner/operators. “One of our brand standards is that no two assets should be alike,” Habbel said. The advantage for the traveler is that each property is different and authentic to the location.

“In Umbria, we bought a property in an ancient village from the 13th century and transformed it into a charming hotel. I guarantee you that the standards there – from room size to water pressure – will be different from those in downtown Lisbon,” Habbel said. “That’s fair, and it always will be unless you knock the village down and put a box on it, which isn’t something authentic to us.”

Creating value through operational culture

One of Limestone’s brand standards may be that there are no brand standards, but Habbel draws on its own experience as a traveler to develop the way its hotels are operated. “It feels very organic because you’re always building for yourself in a certain way,” he said. “It’s a great way to start if you’re building something that you’re not only proud to tell your friends about, but something to bring your friends to.”

Much of this experience is provided by the people who work in the hotels. And Limestone, through its Aethos brand, strives to create a unique culture. “We don’t think of our team as hotel staff who only have well-defined tasks like a waiter or a bartender,” Habbel added. “We train people to be generalist hosts and encourage them to treat the property as their own home – from registering a guest and serving coffee to planning experiences.”

Aerial view of Aethos Ericeira

For example, Delfina, their chef at Saragano, often takes guests on a guided walk through their gardens or invites them into the kitchen to help cook an authentic Umbrian meal. She does this because she is empowered to create an experience that goes beyond just being a chef.

The goal is for the client to see this and feel like they are visiting a good friend’s house, even if they are on the property for the first time. “It’s a truly exceptional experience that brands with all the money in the world struggle to do,” Habbel said.

Culture is a differentiator and value driver for Limestone. “It’s something in our DNA, and you can’t introduce new DNA into a company through a reorganization or a training program. That’s the beauty of what we’re able to do from scratch,” Habbel said.

Building momentum for the future

With five hotels open and more on the way, Limestone is staying true to its thesis and seeing travelers respond to its offering. “We were kind of lucky to really have our finger on the pulse and Lisbon as the first place we started was just a wonderful place,” Habbel said. “And since then, some of these trends that I described just exploded.”

Habbel and his team don’t explain Limestone’s investment thesis and brand concept as much as they used to. “Now these things are a no-brainer for many people and we feel very lucky to be part of the future of lifestyle hospitality experiences,” he said.


Comments are closed.