InsightsKAP’s insights on private equity investor relations and fundraising
Amazon Go ushers in a new retail era; Wyndham acquires La Quinta, further consolidating the hospitality industry.
The future of shopping arrived this week, with the opening of the first Amazon Go – a cashier-free, checkout-free grocery store – in Seattle. The store uses machine learning and computer vision to keep track of shoppers and what they’re buying. Amazon has been working to reinvent the brick-and-mortar shopping experience after years of dominating online retail.
CAPITAL RAISING UPDATES
Goldman Sachs raised $6.7 billion for its third real estate credit investment vehicle. GS has reached a final close for Broad Street Real Estate Credit Partners III (RECP III), managed by the Real Estate Group in Goldman’s Merchant Banking Division (MBD). The third fund in the series will pursue the same strategy as its predecessors, targeting direct originations of both senior and mezzanine loans backed by high quality assets in the U.S. and Europe. Since 2008, MBD’s Real Estate Group has raised more than $15 billion of commitments.
“There’s significant fundraising taking place in the debt space and we think that it will continue. Debt funds are taking the place of traditional lending sources like banks, CMBS, insurance companies or other types of investment vehicles that for a variety of reasons don’t exist anymore.” – Alan Kava, Co-head of MBD’s Real Estate Group
Raith Capital Partners launches new debt vehicle. Raith Real Estate Fund II will invest opportunistically in debt secured by U.S. properties. The fund recently held a first close on $92 million, receiving a $50 million commitment from New Mexico Educational Retirement Board (NMERB). The fund’s predecessor held a $75 million final close in 2014, below its $225 million target. Since 2009, the principals of the firm have deployed more than $1.7 billion of equity capital across these strategies.
Wyndham Worldwide is acquiring smaller rival La Quinta Holdings for $1.95 billion. The acquisition marks the latest in a series of deals consolidating the nation’s hospitality industry. Mergers over the past several years have put nearly half the nation’s 53,400 hotels under the control of six hotel giants — Marriott, Hilton Worldwide, Intercontinental, Wyndham Worldwide, Choice Hotels, and Best Western Hotels & Resorts. The biggest deals took place in 2016 when Marriott International Inc., the world’s largest hotel company, took over Starwood Hotels & Resorts Worldwide Inc. in a $13-billion deal.
LIMITED PARTNER NEWS
- City of Tallahassee Pension Fund has hired CenterSquare Investment Management to run a $50 million real estate investment trust portfolio. The $1.5 billion public pension also considered Brookfield Asset Management and Cohen & Steers. The pension fund’s investment consultant, Segal Marco Advisors, assisted in the search. Tallahassee currently allocates 15.2% of its total assets to the asset class, slightly above its target of 15%.
- Nebraska Investment Council (NIC) is looking to make up to three new real estate commitments over the next 12 months with existing managers. The $25 billion public pension has not decided how much capital to deploy or which strategies to target. As of November 2017, the real estate portfolio had 26 active investments representing just over $1 billion of total commitments.
- Teacher’s Retirement System of the State of Illinois is searching for a real estate consultant to perform due diligence on potential co-investment opportunities (RFP available here). The $50.9 billion pension fund’s current general consultant, Courtland Partners, may bid for the position. Proposals are due by February 21st.