Insights

KAP’s insights on private equity investor relations and fundraising

 

 

Logistics investment volume strong globally; Brookfield continues expansion quest; Oregon seeks new real estate investment officer

 

MARKET NEWS

Global commercial real estate investment in 2017 hovers at second highest level in a decade. Global volumes for completed sales reached $873 billion last year, matching the total recorded in 2016. The U.S. registered its second year of falling investment, led by a 32% drop in the New York metropolitan area, but a 6% rise in Asia-Pacific and an 8% increase in Europe offset this decline. Activity has been especially robust in the industrial sector, where investors have been targeting logistics warehousing as companies change their supply chain. Investment in the sector rose 33% last year to $127 billion.

Logistics investments making headlines in the past two weeks include:

 

CAPITAL RAISING UPDATES

Standard Life Aberdeen launches diversified private markets fund. The Global Private Market Fund (GPMF) will invest in private equity, venture capital, real estate, infrastructure and private credit funds with the option “to make co-investments or invest off balance sheet.” The global strategy aims to provide LPs with access to a range of private market assets without assembling their own portfolio. The firm said the fund, which is targeting a 9% to 12% return, “could be especially beneficial for smaller pension schemes with less capacity to manage private market investments themselves.”

Hamilton Point Investments launched sixth real estate fund. Hamilton Point Investments, a multifamily investor based in Connecticut, has begun raising capital for HPI Real Estate Fund VI, with a $100 million target. The fund will acquire about $250 million of post-2000 construction, class A-/B+ apartment properties. The fund’s predecessor closed on $115 million at the end of 2017.

Blackstone exceeds fundraising target for Asia-focused fund. Blackstone has raised $5.51 billion for Blackstone Real Estate Partners Asia II, exceeding its $5 billion target. The fund, which launched in Q1 2017, will invest in warehouses and shopping malls in China, India, Southeast Asia and Australia. LPs in the fund include Illinois Municipal Retirement Fund, Minnesota State Board of Investment and South Dakota Investment Council. It is unclear if this is the fund’s final close.

 

PEOPLE MOVES

Corestate appoints new CEO. Corestate Capital Holdings has appointed Dr. Michael Bütter as its new CEO, where he will be responsible for the firm’s strategy, international expansion, M&A activities, management of real estate investors and client relations. Bütter, who has more than 18 years of industry experience, succeeds Sascha Wilhelm and will assume the role on May 1.

Prologis names new head of global capital raising. Martina Malone, who joined Prologis in 2010, will become the head of global capital raising. Previously, she served as senior vice president of client relations in Europe and the Middle East. She succeeds Jim Green, who began building the team in 2009. Green is stepping down to assume the role of special adviser. In his new role he “will be focusing on the things he does best, which is cultivating new business prospects,” said Gary Anderson, chief executive of Europe and Asia at the firm.

Oregon State Treasury announces search for real estate investment officer. The new position will improve staff capacity and expertise in the diversified real estate portfolio, which had a value of $77 billion at the end of 2017. The new officer will join an existing portfolio management team that oversees private partnership relationships with holdings both domestic and overseas.

 

NOTABLE TRANSACTIONS

Wyndham nears deal to sell European vacation-rentals business to Platinum Equity Partners.  The sale is part of Wyndham’s larger strategy to spin off the hotel and timeshare businesses into two separate publicly traded companies, allowing each to better focus on their specific segments of the lodging sector. The deal values the division at around $1 billion including debt. Platinum’s interest illustrates the buyout industry’s appetite for deals in the U.K. hospitality and leisure sector.

Brookfield Residential acquires national mixed-use developer OliverMcMillan. OliverMcMillan acquires, designs, develops, manages and leases mixed-use and stand-alone real estate properties across the U.S. and Canada. The combined entity aims to become a premier North American mixed-use developer. OliverMcMillan’s existing real estate assets will continue to be self-managed.

“This strategic acquisition supports our belief that the increased focus on urban intensification taking place in many of our North American markets, alongside some of the disruptions in the retail sector, will create a significant pipeline of redevelopment opportunities over the next few years.” – Adrian Foley, President & COO, Brookfield Residential

Google agrees to $2 billion Chelsea Market deal. The 1.2 million-square-foot office-and-retail property at 75 Ninth Avenue is known for its first-floor food hall and is also home to Major League Baseball and the Food Network. Google is already the largest tenant at the building, leasing about 400,000 square feet of space and the company’s New York headquarters is right across the street. The seller, Jamestown LP, an Atlanta-based real estate investment firm, bought out its partners Angelo, Gordon & Co., Belvedere Capital and Irwin Cohen in the building for $225 million in 2011, valuing the property at nearly $800 million at the time. It is not clear what Google is planning for Chelsea Market, though sources said the company is expected to keep the status quo at the property’s retail component. According to the Real Deal, a closing is expected in April.

Starwood Capital JV buys Forestar portfolio. A joint venture between Starwood Capital Group and Land Strategies Management has acquired a diverse portfolio of residential and commercial real estate assets for $232 million. The assets are concentrated in high-growth markets throughout Texas, the Southeast and the Western United States. Land Strategies Management will manage the assets on behalf of the JV.

“The communities acquired in this portfolio are well positioned to capture the increasing demand driven by demographic shifts and strong growth from both younger and older buying profiles.” – Mike Moser, CEO of Land Strategies Management

 

LIMITED PARTNER NEWS

CalPERS commits $750 million to Blackstone Property Partners Europe.  The fund is a core-plus real estate fund that invests in properties throughout Europe. It is the first European open-ended, core-plus fund for Blackstone. The firm’s first core-plus vehicle, Blackstone Property Partners, is a U.S.-focused open-ended real estate fund that launched three years ago. At the February 12th board meeting, Wilshire also presented CalPERS with an Executive Summary of Performance for 2017. Notably, the private real estate portfolio (nearly 83% of the total Real Assets portfolio) returned 8% for CalPERS in 2017. As of December 31, real estate comprised 9.1% of CalPERS’ total portfolio slightly below its 11% policy target.

New York State Teachers’ Retirement System (NYSTRS) has made six new real estate commitments. The pension fund is investing $200 million in Grosvenor Capital Management Debt 2018, a vehicle that will place debt with emerging real estate managers in the U.S. It has also committed $100 million to Northwood Real Estate Partners (Series VIII), $100 million to Penwood Select Industrial Partners V, $75 million to Abacus Multi-Family Partners IV, $75 million to Artemis Real Estate Partners III, and $50 million to GreenOak US III. The $117.5 billion public pension fund has a current real estate allocation of 6.21%, below its 10% target.

Teacher Retirement System of Texas (Texas TRS) committed $200 million to Madison International Prime Property. The core fund focuses on capital partner replacements, equity monetization and recapitalizations of class A properties located throughout the U.S., U.K. and Western Europe. Texas TRS is a $142 billion public pension plan with a current real estate allocation of 12.1%, below its 14% target.

Employees Retirement System of Texas (Texas ERS) has made two new real estate commitments. Texas ERS committed $101 million to BPE Asia Real Estate Fund II and $50 million to Torchlight Debt Opportunity Fund VI. Both managers are existing relationships for the pension fund, who committed $75 million to BPE’s first Asian real estate fund in 2015 and $35 million to the fourth fund in the series managed by Torchlight. The $28 billion public pension fund is an active investor in real estate with a current allocation of 9.27%, slightly below its 10% target.