Insights

KAP’s insights on private equity investor relations and fundraising

 

 

Jon Gray named President and COO of Blackstone; Brookfield prepares to capitalize on market correction

 

MARKET NEWS

2017 real estate fundraising falls short of 2016. Q4 2017 saw 26 funds close on $26.6 billion, bringing the total capital raised for the year to $94.2 billion across 126 funds. This continues the downward trend started in 2016, when $99.5 billion was raised compared to 2015’s $110.5 billion, according to IREI’s latest fund tracker report.

Sovereign wealth funds favor technology and property deals. Technology and real estate investments led deal-making for SWFs in 2016 and the first half of 2017 according to a report from IE Business School’s Sovereign Wealth Lab. Technology was the most popular sector, accounting for 26.1% of total transactions in the first half of 2017. Real estate accounted for 23.9% of deals over the same period, up from 21.5% in 2016. CIC’s $13.8 billion acquisition of warehouse group Logicor was the biggest deal. According to the report, deal making remains concentrated among a handful of key players because of the large specialist teams required to identify, assess and execute transactions.

 

CAPITAL RAISING UPDATES

Brookfield Asset Management has raised $7bn to date for its latest opportunistic fund. The fund, Brookfield Strategic Real Estate Partners III (BSREPIII), launched in Q2 2017 and is expected to close later this year. If successful in reaching its $10 billion target, the new vehicle would be Brookfield’s largest, exceeding its $9 billion predecessor fund, which closed in April 2016. Brookfield has also recently announced that it is selling off assets so that it will be ready to pounce in the next down market. The Toronto-based firm sold about $12 billion in mature assets in 2017 and said it will continue to do so this year. Brookfield has $285 billion under management and said it has more than $25 billion in core liquidity and dry powder in its private funds.

Whitman/Peterson collects $402 million for third opportunistic fund. Whitman/Peterson Partners III has registered the capital from 15 investors, according to a filing with the SEC. Its predecessor fund raised $235 million.

 

PEOPLE MOVES

Jon Gray named president and COO of Blackstone. Blackstone announced that Tony James, president and COO, will be handing over day-to-day management of the firm to Jon Gray, global head of real estate. James will continue in a full-time role at the firm and assume the title of executive vice chairman, reporting to Stephen Schwarzman, co-founder, chairman and CEO. Gray will become president and COO also reporting to Schwarzman. Two long-time leaders in Blackstone’s real estate group, Ken Caplan and Kathleen McCarthy, have been named global co-heads of real estate succeeding Gray.

Rubenstein Partners hires first IR head. The Philadelphia-based firm is building out its capital-raising capabilities for its equity and newly-launched debt arms. Ferhat Guven will join the firm as director of investor relations starting February 1, where he will oversee a team build-out to deepen the firm’s existing investor relationships and broaden its investor network. Guven joins Rubenstein from London-based placement agent Threadmark, where he led the firm’s U.S. real estate activities. Prior to Threadmark, he spent two years as a managing director of investor relations at Jamestown Latin America, a subsidiary of Atlanta-based Jamestown. Guven worked at Paladin Realty Partners for seven years, raising capital in Europe and the Middle East.

 

NOTABLE TRANSACTIONS

Oak Street Real Estate Capital partners with startup REIT. Generation Income Properties, the public REIT founded by David Sobelman, has entered into a preliminary financing arrangement with affiliates of Oak Street Real Estate Capital. The joint venture intends to acquire high quality, investment grade net leased commercial real estate.

 

LIMITED PARTNER NEWS

State of Wisconsin Investment Board (SWIB) committed $200 million to two real estate funds. SWIB committed $100 million each to Penwood Select Industrial Partners V and Blue Moon Separate Account I. Penwood is a value-added fund focused on industrial real estate, mainly warehouses, throughout the U.S. Blue Moon invests exclusively in senior housing communities. SWIB currently allocates approximately 5% of its assets to real estate, below its 8% target.

Virginia Retirement System has committed $100 million to Penwood Select Industrial Partners V. Penwood is a value-added fund focused on industrial real estate, mainly warehouses, throughout the U.S. Virginia also committed $200 million to Pantheon Ventures for a separate account investing in infrastructure. Virginia Retirement System allocates approximately 5% of its total assets to real estate, below its 15% target allocation.

Montana Board of Investments has committed $90 million across three real estate funds. The public pension has committed $30 million each to Stoltz Real Estate Fund VI, BKM Industrial Value Fund II, and Centerbridge Partners Real Estate Fund. The $11 billion public pension fund allocates approximately 7.7% of its total assets to real estate, below its target 10% target.

Los Angeles County Employees’ Retirement System (LACERS) committed $50 million to Heitman Asia-Pacific Property Investors. Heitman is a closed end value-added fund focused on retail, industrial and residential assets in Asia and Australasia. The fund reached a first close on $182 million of its $250 million target in July 2017. LACERS currently allocates 12.2% to real estate, above its 11% target.

South Carolina Retirement Systems (SCRS) has increased its target allocation to real estate. According to a recent presentation from consultant Meketa, the $31.1 billion public pension fund has approved an increase in its target real estate allocation from 8% to 9%, while decreasing their infrastructure target from 3% to 2%. The increase in allocation will bring the pension fund more in line with other U.S. public pension funds.

Alaska Permanent Fund Corporation (APFC) seeking a real estate consultant. The $63.3 billion sovereign wealth fund is seeking a firm to provide general real estate consulting, third-party valuation management, and data management and reporting. APFC maintains an 11% target allocation to real estate and invests directly, as well as through private and listed funds.