Patron Capital’s Keith Breslauer On Trump, The Labour Government And Kick-Starting European Investment

This series goes deep with some of the most compelling figures in commercial real estate: the dealmakers, the game-changers, the city-shapers and the larger-than-life personalities who keep CRE interesting.

Patron Capital’s Keith Breslauer is always energetic, with a 200-word-a-minute speaking style befitting the native New Yorker who now runs one of Europe’s best-regarded real estate fund management businesses.

But right now, he is especially animated.

The economy in the UK and Europe may be slow, but Patron is still finding deals for the €860M (£717M, $890M) value-add fund it raised last year, including joining up with Sixth Street Partners to buy UK homebuilder Cala Homes for £1.4B — a business it likes so much, it is the second time Patron has bought into it. The company is also planning a new fund later this year.

Yet Breslauer is particularly spirited when discussing the major political changes that have occurred in the U.S., UK and Europe over the past six months.

In returning U.S. President Donald Trump, he sees a fundamental change in the social, political and economic landscape of the West, one set to have substantial impacts on real estate and finance. 

This interview has been edited for length and clarity.

Bisnow: How is the macroeconomic picture looking at the start of 2025, and how will that impact real estate?

Breslauer: I think the microtrends of supply and demand imbalances, stabilising rates, slowing inflation, decent demand and ESG constraints remain the themes. Anything that touches that, not much has changed since a year ago.

What has changed, if I go back a year ago, there was significant geopolitical uncertainty with respect to many countries. Everything was up for elections. You had the wars in Russia and Ukraine. You had the Middle East situation. There was a general sense that rates were going to drop pretty dramatically as things slowed. What's changed is that Trump and his leadership approach and style, whether you agree with it or not, is empowering, and ... the animals within the market or the active market participants see the rise of Trump and his win as empowering positively.

The assumption, whether one agrees or not, is that entrepreneurs and entrepreneurial energy will kick in, hence why rates rise in the U.S. and inflation may not come down so much. You kind of grow quicker, and that drags UK rates up. 

The fear is that our rates set by the ECB or the Bank of England will not come down as quickly as the market says, and that will have a direct impact on real estate values. There's generally a sense of slow growth. We have full employment. And therefore, it's not clear what would be the major positive drivers to create growth in Europe.

Bisnow: What will the impact of Donald Trump’s election be for economies and real estate?

Breslauer: I think everyone should listen to [his inauguration speech] and the second speech he gave because whether you agree with the guy or not, he's the president of the United States, and he's a fucking leader, full front and center. Have you ever heard [UK Prime Minister Keir] Starmer even talk 10% of what he said? Or anyone? Maybe [French President Emmanuel] Macron has tried, but now has been weakened, so there's no one. 

Some of the stuff he’s said has been pretty wild — Gulf of America, we’re reorganising the federal government, we’re putting emergency powers in place to deport illegal immigrants. This is pretty hardcore stuff. 

Now, let's assume we get 60% of what he's saying. That’s leadership. You may not agree with it, but that's leadership. And there's not that sense anywhere in Europe. And without that, and without any other market supporting it, what would drive the growth? 

You can hate Trump, but he's empowering, right? “We're going to make America great.” Why did my father-in-law want to spit when you said Obama's name and loved Trump so much? Is it because Trump's a good guy? Not really.

Trump picked up on a very smart thing. He picked up that Americans ask, “Why did we fight in Korea and in World War II and fight in strange countries, and our children got killed to preserve this concept of liberal democracy?” Because we were trained that America is exceptional. And don't tell me America is not exceptional, Mr. Obama, and we're like everybody else, and then at the same time fight wars for them. We are exceptional, and Trump picked up on that. Trump, let's assume he's totally full of shit, for the sake of argument. But his genius is he resonated with people.

Bisnow: How does Trump’s win affect the UK economy/market?

Breslauer: The UK benefits from the U.S. If Trump makes a deal with the UK, the UK all do very well. If Trump doesn't make a deal with the UK and imposes tariffs, they won’t do as well. If they did 25% on other countries, what will they do? Ten percent on the UK? If he's half-smart, Starmer will be going to the U.S. with a begging bowl trying to make a deal because a trade deal with the U.S. will be massively positive for UK. And if they don't have a trade deal, there will still be growth, but it won't be the same push. 

Bisnow: How has the new Labour government affected the economy and, hence, the real estate market?

Breslauer: It’s just a slow thing. In order to get off that slow treadmill, you’ve got to turn a treadmill up, and you can't really do that with government debt anymore because there’s too much government debt. If you put too much on taxes, you'll slow everything down. Most of this is perception, almost all of it.

So the Labour government, for example, has imposed national insurance tax and minimum wage tax. Now, if you ask any small-business owner or midmarket owner, are they hiring any people today? The answer is no. We're not hiring a single person anymore in any of our companies unless we're replacing existing people, period. What does that mean to growth? Kills it. So when Rachel Reeves says, “Hey, I'm going to have all these great growth ideas,” if she wants to invest in enterprise zones or provide government support to help drive in a local industry, etc., that's great, but everything else she's created in a perception over the market, that's pretty crap. 

For instance, [tax increases] for “non-doms.” How much money do you think she actually raises by doing that versus what's really happening, that every single person I know is leaving or is working on plans on leaving? I have employed 20,000 people in this country, maybe more. I'm an American. For 32 years, I pay British tax and American tax, full tax. I’m not a tax exile like other people. But frankly, given the increased tax burden, why am I staying? I don't know. I don't have kids here anymore. My kids are all grown up. Do I have any affinity?

Bisnow: What might happen that means the economy in Europe surprises on the upside?

Breslauer: Imagine that Ukraine and Russia make a deal because of the new Trump administration. And imagine that deal is Ukraine, it becomes like Korea. So Crimea goes to Russia. The Donbas is a demilitarized zone shared between the two, and the rest of Ukraine and Russia is kept held at bay. And then Trump makes a deal with Germany, enacts [a new] Marshall Plan, and starts rebuilding Ukraine. And every German construction company goes in there and starts doing deals. That will empower the German economy.

Will it happen? I don't know, it’s a lot of ifs and buts, but it's something that's a catalyst that can help growth. You need catalyst. You need something now to drive that growth story.

China deploying massive fiscal stimulus or a UK-U.S. trade deal would also be good, positive surprises. The local stuff is just noise. 

Bisnow: What real estate sectors are exciting you at the moment?

Breslauer: Residential remains very exciting. The important positive change in past years [is] banks have provided financing. Banks are healthy, so liquidity in the system remains OK. That means we could buy homes, we could rent homes, so that's exciting. 

What gets scary is I heard an expression over the weekend called the “flick of the switch.” The Americans view Europeans [as having] the flick-of-the-switch government approach, which is everything's going great, and then one day, someone flips a switch. The Spanish prime minister says, “There’s going to be 100% tax on foreign property owners.” That's a flick of the switch.

Generally, it's either in permitting, which affects real estate, or tax. So the Labour government says, “We're going to enforce local councils to approve planning.” Great, that has to happen. Is there a bit of an accelerated process because [local authorities] think Labour is going to come in and do something? Maybe. But no one knows. 

Bisnow: You raised a new fund in May last year? How is that going, what have you bought, and what are your plans for future fundraising?

Breslauer: There is a lot of opportunity out there, and we're pursuing it. We've deployed 60% of our current fund, and we’ll be raising another fund, probably in the third quarter this year.

We invested in the Livingston Designer Outlet. We bought the Blackpool Shopping Centre and retail park in Cork[, Ireland], and we do very well there.

Bisnow: Philanthropy is clearly hugely important to you. What are some of the other organizations you’re involved with? 

Breslauer: I think everybody, every professional, has an obligation to give back to the community. That's my main thing. Unfortunately, along the way, there are people who can't survive. So we're here. That's what our job is. This social contract has to help those people. I'm a conservative in my business beliefs, but I'm a centrist or left-centrist when it comes to social welfare.

I am the largest single funder of the Royal Marines Charity. I am the largest funder of the Prince's Teaching Institute, the largest charity for state school teaching in the United Kingdom.

I have a big ski trip in March. We take 120 people away, and I’ve got six or eight veterans coming, disabled guys. There are two blind guys, a couple of guys in wheelchairs. We’ve got to figure out how we’re going to do it, but we’ll figure it out. I’ve got 363 kids, people who are disabled, that I'm helping. I’ve got 130 kids going away skiing in Bulgaria over the course of four or five weeks who are from communities that have been destroyed, including four or five released hostages.

That’s what I’m focused on. I’m in the business of doing cool shit. Don't talk to me on any boring stuff. Let's go together and make a positive difference in someone's life.

Bisnow: Patron launched a fund in 2020, the Women in Safe Homes Fund, buying housing and using it to house women and families who are escaping domestic abuse. How has the fund progressed?

Breslauer: I'm a believer that there are investors out there for all the different risk-adjusted return spectrums. Our argument was, let's go find those investors who see residential rentals as good. 

The interesting thing is that the pushback we got was not on residential returns. In fact, we're doing a Spanish residential thing where investors were going to earn the same return. The pushback is people were afraid that the husbands would get public and there would be blowback on their reputation. That's really sad, because what's the point then? 

We wanted to raise £100M. We got to £30M, so we definitely underraised. The people that invested with us were basically foundations who had a mission statement to help rather than traditional institutional investors. Is this an investable, impactful product? It's impactful, but it's not really a great financial product, because we couldn't raise a lot of money, we couldn't get interest, and it's very hard to scale because most of the charities you deal with are very localized teams of a national charity. So there's a billion-pound problem, but we couldn’t even raise £100M. I would argue that it's a great thing we did it. I'm extremely happy we did it, but it's not scalable.

Bisnow: What are the barriers to investing in UK affordable housing for institutional investors?

Breslauer: Affordable housing is a huge issue in this country. People can't afford houses or rentals. We have been trying to figure out how to create an investable model for affordable housing. We're doing a lot of work on it. I might be launching a core-plus living fund and include affordable housing in that fund. There's a huge need and a demand-supply imbalance. 

The question is how to do it, and can you do it without government support? Is there going to be something that is an affordable housing-related product or support that can support that story. America has Fannie Mae and Freddie Mac. We don't have it here, so that's a real issue. You have a planning problem, but you also have the cost of building, and how do you make that work? I would like to tell you two years from now, we will be doing a lot more in the affordable space, but right now we're doing very little.

Bisnow: What could the government realistically do to support affordable housing, given the state of the national balance sheet?

Breslauer: Well, they could give grants. They could do things that have longer-term costs but don't get picked up in the short term on the balance sheet.

Bisnow: Give us your bold prediction for 2025

Breslauer: My bold prediction for this year would be that the majority of Trump's rhetoric will not convert into aggressive negative action but will empower positive results. Hostage release, Ukraine-Russia War resolved, trade deal with England. The EU consolidating its NATO position to improve itself, reducing some of its regulatory barriers to create business. 

Bisnow: Finally, tell us about your perfect weekend

Breslauer: My best weekend away is when I go do climbing, skiing with my kids, when I'm away with my children in the mountains. Those are my two best things in my life. I enjoy my children and being in mountains.

And I'm a big ’60s and ’70s music guy, and I was listening to Fortunate Son. Remember that song? I think it was Creedence Clearwater Revival. And you know what it's about? It's actually about being from a rich family, right? Avoiding the Vietnam War, which is him. So the guy who basically was a “fortunate son” is a guy leading the country, talking about the downtrodden.