Investor Profile: Limestone Capital – from Google to boutique luxury

Aethos Mallorca
An impression of the Aethos Mallorca. (Limestone Capital)

During our conversation, Benjamin Habbel more frequently describes himself as an hotelier rather than a real estate investor. He talks passionately about the importance of the finer details of giving guests the best experience, from milk to locally sourced food and a zero tolerance policy on plastic. 

He grew up in the hospitality industry, watching his grandparents run a large five-star hotel in Germany.

“It was very much a luxury hotel,” he said. “You get a taste of what that lifestyle as a hotelier feels like and what makes a great host or hotel. So parts of my family had that background but I took a very different route at the beginning of my career.”

Today, Habbel is the managing partner and co-founder of Limestone Capital, a property investment firm targeting the real estate and hospitality sectors in the European Union. 

The firm, which launched its first fund, Amethyst, in September last year, is a joint platform between European investors including the Vienna-based family office of general partner Alexander Schütz and Christian Angermayer’s Apeiron Investments in London. 

Joining Habbel as co-founder is Jeff Coe, a former angel investor in European hospitality. He was involved in the sale of  Voyat, a hospitality-focussed software company - where Habbel served as the founding chief executive - and the latest initial public offering of hotels booking platform

Limestone’s second fund will launch imminently, says Habbel, and will continue Amethyst’s strategy of turning small, underperforming hotels into tech-enabled boutique offerings.

Skin in the Game

The firm’s 50% capital commitment to first fund – its skin in the game – is a stark contrast to the 1% to 2% typical of many private fund managers. 

“We’re not traditional fund managers,” said Habbel. “We often start investing in deals with 100% of our own money. Family offices, fellow founders and peers of ours wanted to get on board with this very unique investment strategy, so we opened up our platform to highly curated like-minded entrepreneurs and investors… Our origin is a very entrepreneurial company building, deploying our own money.”

It offers two routes to its deals – an investor commitment to its funds and opportunities to directly co-invest with Limestone.

“Maybe you specifically believe in Portugal and might not see the same in other countries. We had partners in the past who wanted to invest in a specific region or city but the majority like the fact we are doing four deals, five deals a year and get exposure to all of them.”

Limestone’s distinct style - with sustainable materials, “intimate travel experiences” and an emphasis on vegan and gluten-free options on its hotels’ menus – is a core part of its strategy. The other is the chance to buy real estate at attractive valuations thanks to the impact of the pandemic.

“This is a very unique place and time where things are looking very bright for the future and you have to act now or miss this once-in-a-decade, once-in-a-generation opportunity,” he said.

“The general trend has been to authentic hospitality, experiential hospitality, personalised, authentic experiences,” he added. “You cannot deliver this credibly with a 150-plus hotel… Now you add to the fact people are avoiding masses or mass gatherings and are seeking more privacy when they travel. Many travellers are willing to pay a premium for it. 

“For instance, we acquired a property in Corsica that’s a 16th century palace with only nine suites. We renovated it and added fully operational, plant-forward restaurant which makes it an incredibly unique lifestyle boutique hotel.”

New Geographies

Limestone has properties in Italy, France and Portugal, and in September agreed to buy the former Mar Y Pins hotel on Mallorca from Austrian entrepreneur Harald Fischl, who remains a partner and minority shareholder.

In April, Limestone bought boutique hotel The Yard in Milan – its second deal in Italy, after its acquisition of Aethos Saragano in March last year.

In December, Limestone bought Hotel U Palazzu Serenu, a boutique luxury hotel at the foot of Oletta, “one of the most striking villages in Corsica,” Limestone said in a statement at the time.

Limestone is eyeing up expansion into new geographies, with a pipeline building in Germany, Switzerland and Spain.

Meanwhile, it runs its own hotels through its Aethos hospitality company rather than contract a third party to oversee its assets’ day-to-day operations. Aethos has three fully operational properties and Limestone aims to grow the brand to about 15 or 20 in the near future.

Through its minority stake in Emerald Stay, Limestone has exposure to the holiday let market for luxury second homes. 

“Early on, we saw this opportunity with small boutique hotels that don’t lend themselves to the traditional hotel set-up,” said Habbel. “We knew the Emerald team was building a highly needed solution for owners. So we became their first investors and have joined the board, supporting the founders in scaling the operation. We are seeing significant growth in this category.” 

It may be a good time to find assets at attractive prices but where are we in the post-lockdowns recovery of the hospitality industry?

Broadly, Limestone’s portfolio is performing better than in 2019, says Habbel. “There is friction or pressure on a lot of hoteliers because banks are starting to call their capital, and [profit and loss] start to get impacted because teams and staff are have to come back full time and if you’re in the wrong segment, that’s a big problem. 

“We like to be in a segment that is outperforming the rest of the industry as it delivers to the quickly evolving customer demands. All in all Lifestyle and boutique hospitality is one of the winners of the pandemic.”

“People are so eager to get out and are accepting they have to pay a premium to be able to do that,” he added.

Tech Focus

An important part of Limestone’s approach is its focus on technology at the heart of a hotel’s operations, driving business and reducing costs.

Habbel’s digital background includes a stint as chief of staff to then senior Google executive Marissa Mayer, managing special projects and communications. At Google he also led marketing initiatives for Android and Google Search, and worked on Google Maps.

“At Google you naturally have the ability to rapidly scale a new product to a global audience, and you have access to cloud-based technology platforms and an incredibly unique talent pool.” he said. 

“Then you look at hospitality, which often at times is on the other end of the scale with legacy technology vendors and consultants, antiquated software, and outdated ways of doing business if you come from the technology or startup world. 

“If you look at how Europe compares to the US, it’s a completely different market and we really saw a huge opportunity to look at this highly fragmented market and identify independent hotel owners that are ready to trade their assets, and build an investment product that didn’t really exist, while offering a new travel experience to an ever growing audience of emerging lifestyle travelers that we think is a very promising and high-growth audience.”

Limestone's Benjamin Habbel will be speaking at Questex's upcoming Resort & Residential Hospitality Forum in the Algarve between 25 and 27 October.

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