When the Conle family outbid the Qatar Investment Authority to buy a trophy London building for £25m over its £200m asking price last May, it generated no small amount of interest. Two months later the family did it again, spending £610m on a single office block, the 550,000 sq ft Shell Mex House, WC2 (20 July 2013, p27).
The Conle family investment vehicle Sirosa accounted for 9% of the total £9.2bn of transactions in the West End and London fringe in 2013, according to Strutt & Parker, and the UK real estate community desperately wanted to identify this potential source of business.
Mayfair’s wine bars were buzzing with rumour. One agent that has sold to the family in London says: “At first we had to question if the money and company were real as we couldn’t find them in any rich lists. With so much private wealth around you can’t always find out who exactly is behind the money. However, when such trophy assets are being traded usually some names will leak out – Sirosa has remained a mystery.”
There is no Conle in the Forbes World’s Billionaires list and search engines yield few results.
With few sure where the money was coming from, and no one who does know ready to talk, speculation has filled the void (see below).
Here Estates Gazette separates the facts from the fiction and looks ahead to what London’s least-known billionaire family might do next.
Who are they?
The first mention of the family in relation to London real estate dates back to 1993, when newspapers reported that Henning Conle, a German investor, had bought Northcliffe House, W8, home to the Barker’s department store. Since then, advised by John Rigg, director of central London markets at Savills, the investor has quietly assembled a large portfolio of London freeholds.
That first London property was followed with several others over the next 20 years: the Plaza shopping centre, Oxford Street, W1; the Liberty department store, Great Marlborough Street, W1; and Stratton House, Piccadilly, W1 (see below).
The properties are controlled by a variety of offshore vehicles, typically with names such as Sirosa Liberty Ltd or Sirosa Ltd.
All of the vehicles are registered care of tax adviser WSM Partners, at Pinnacle House, SW1, an unassuming office block in Wimbledon.
Agents advising vendors that have sold to the Conle family all say they met only with German representatives acting on behalf of the family trustee.
“The representatives were very diligent, very competent, and very slick. They definitely knew what they were doing,” says one agent.
In the case of Shell Mex House, Land Registry records indicate the family bought the corporate vehicle that controls the building, Strandbrook Ltd. According to documents filed at Companies House, the three directors of Strandbrook resigned in November last year and were replaced with three new directors: Henning Conle, 70, Henning Conle, 33, and Johanna Conle, 30. The company’s registered address moved from Berkeley Square to Pinnacle House, SW1, shortly afterwards.
A fourth family member is understood to have recently taken over the London projects.
Family tree
While there may be no reference to the Conle family in any list of billionaires, there is accessible information on its original patriarch, Kurt.
Together with brother Heinrich, Kurt Conle set up an architectural and construction business in Speldorf, Germany, in 1948, which became known as Gebrüder Conle GmbH.
The company quickly established itself and small private housing projects were followed by lucrative government contracts to build schools, hospitals, and major social housing schemes. But the family’s real money came from another business.
In 1955, shortly after Germany regained its independence, Kurt Conle teamed up with Englishman Bernard Dromgoole to establish a commercial airline, the Air Transport Union, later renamed the Air Transport Enterprise or LTU International, a business that by 1990 was turning over $1.4bn (£800m).
Kurt died in 1966 amid a lengthy court battle relating to alleged fraud on social housing contracts.
He left his majority shareholding to his wife, Hilde, and family, which they continued to control for decades. Then, in 1989 German bank WestLB bought 34% of the business for an undisclosed sum.
The family sold the entire business by 2000, leading German newspaper Der Spiegel to put their combined worth at around £600m.
It is from this point that the trail of the family’s swelling fortune begins to run cold, with the few German press reports that mention the Conle name focusing on various legal cases involving high-profile fund manager Joseph Esch and his wealthy clients, including Vera Conle-Kalinowski, third daughter of Kurt and Hilde.
Clearly the family had amassed a great fortune, but was it enough to explain the level of investment in London and Germany?
What next?
The family’s earlier investments in London – totalling around £500m – were financed with relatively high-value loans from German banks.
“The more recent London deals were completed at least initially without debt,” says one banking source involved with the previous owners of one of the family’s London assets. “We were led to understand that the deals had therefore been completed with a silent partner.”
And there are plenty of potential candidates from Germany that had historically been substantial investors in London, says DTZ head of inward investment Ben Cook.
In the early 1990s there were a series of high-net-worth Germans who arrived suddenly and spent big in London. They included Karl Heinz Pepper, who is understood to have bought Red Lion Court, EC4, in 1992 for £38m, and the Gertler family, which in the same year paid £37m for The Pentagon, Chiswell Street, EC1.
Perhaps more intriguing is how these private investors fell off the radar almost as quickly as they arrived, choosing to hold their assets long term without adding to them.
Sources familiar with the Conle family now predict they may do the same.
“Once you have amassed such a chunky portfolio, you have to deal with the properties, and this is what I think Sirosa will do,” says one West End agent. “They are likely to hold on to these buildings for life, and their shutters are now down for a while on the spending front.”
And there is some evidence to support this view.
In December last year, Devonshire House, W1, a prime £400m West End office block opposite The Ritz, came to the market.
Agents assumed Sirosa would be a logical buyer for the building, given the enthusiasm it had shown for the last few big West End deals. But it quickly became clear there was no interest. The building was instead bought by Amancio Ortega, the Spanish billionaire behind the Zara fashion chain.
“It is clear the brakes have come on for future London spending,” says a source.
According to Knight Frank’s latest Wealth Report, almost a quarter of ultra-high-net-worths’ investment portfolios are typically accounted for by property. Using that calculation with just Sirosa’s London investments would put the Conle family firmly within Forbes’ 400 wealthiest in the world – maybe that is enough for this most secret of billionaire investors. For now.
LONDON ASSETS
1993: Barker’s Building, Northcliffe House, W8, bought for circa £100m
2004: Plaza shopping centre, Oxford Street, W1, bought for £116m
2010: Liberty, Great Marlborough Street, W1, bought for £41.5m
2012: Stratton House, W1, bought for £166m
May 2013: Kensington Roof Gardens, W8, bought for £225m
July 2013: Shell Mex House, WC2, bought for £610m
The Conle family is also understood to have more than £1bn of assets in Germany, and even more in Switzerland.
The theories
The family behind Sirosa might have made its first investments in London in the 1990s but it was the volume the Conle family spent last year that got people talking. Twice it outbid the Qatari royal family – on Shell Mex House, WC2, and Kensington Roof Gardens, W8, – yet few people have any idea where the money came from.
Soon the pub talk began and theories about the source became far-fetched. Among the most fantastical was that Russian president Vladimir Putin was a silent investor in the business. Putin is often claimed to be interested in London real estate, although more typically linked with luxury Knightsbridge mansions that are par for the course among his oligarch compatriots. The link remains Mayfair pub gossip with no evidence linking the politician to Sirosa. Instead there is a much less eyebrow-raising, far more business-like explanation.
One German banker, who did not wish to be named, claims to have researched the Conle family in the early 2000s as his company considered financing a property acquisition for them.
“Back then it was clear they were worth a lot of money – but probably more like £150m than £1.5bn,” he says. “But they’ve spent 10 times that on property since so a lot of money has come in somewhere.”
His theory, based on the family’s long-standing relationship with Credit Suisse, is that the Conle family made a significant bet on interest rate futures and options in the middle of the last decade.
Having predicted that rates would fall, the family is rumoured to have cashed in its interest rate derivative positions, hence the sudden investment in property.
jack.sidders@estatesgazette.com
joanna.bourke@estatesgazette.com
