Evercore pursues global expansion; Hyatt continues ‘asset-lighter’ strategy; Gaw Capital closes third U.S. fund

 

MARKET NEWS

Evercore pursues global expansion of real estate placement business. The New York-based investment bank, which recently merged with Greenhill, is targeting significant growth for its real estate capital advisory platform, including a plan to increase the group’s international business from 25% to 40% over the next three years. The addition of the Greenhill team, which spans eight markets globally, allowed Evercore to become a platform with a presence across Europe, Asia and Australia. The scope of the platform also has broadened as GPs increasingly pursue asset recapitalizations, fund recapitalizations, and JVs in addition to traditional funds.

“We didn’t have anyone in Asia or Australia, so adding team members there just would be helpful to us in getting in front of more LPs and having a footprint where we didn’t have before.” – Bill Thompson, co-CEO, Evercore

Strong demand for industrial assets might signal M&A boom. If Prologis’ proposed $8.4 billion acquisition of DCT goes through, it will create an industrial REIT with 71 million square feet of existing and planned warehouses and distribution centers. Some believe the deal could trigger a wave of M&A activity in the industrial REIT sector. On the heels of this transaction, Blackstone announced its plan to acquire Gramercy Property Trust for $7.6B. Gramercy is a publicly traded REIT that invests primarily in industrial properties. The all-cash transaction is expected to close in the second half of 2018.

JLL adds workplace planning tool InSite to its arsenal. The interactive tool streamlines the workplace planning, relocation and build-out budgeting process, by visualizing space needs and anticipating costs, speeding up a process that traditionally can take anywhere between a few weeks and several months. Many brokerages have seen the perks of tech for clients and are acquiring real estate tech startups, investing in internal tech solutions and partnering with tech accelerators.

Hyatt CEO: funds for future growth will come from real estate sales. During the company’s Q1 2018 earnings call, the CEO detailed Hyatt’s plans for future growth, noting the continuation of Hyatt’s “asset-lighter” strategy to sell off a total of $1.5 billion in real estate by 2019. In recent years, other global hotel companies have pursued asset-light business models where they own little to no real estate. Hyatt also plans to invest even more in the Chinese travel market, aiming to double its presence there over the next four years (China hotels currently make up 11%, or $54 million, of the company’s global fee revenue).

“We did not plan to abandon the idea of recycling assets, so we do plan to sell existing assets and utilize proceeds to buy other assets. Those acquisitions historically have allowed us to expand in some key markets and to acquire some really important hotels over time.” – Mark Hoplamazian, CEO, Hyatt

 

CAPITAL RAISING UPDATES

Gaw Capital Partners holds $412 million final close. Gaw Capital U.S. Fund III, the firm’s third U.S. focused value-add vehicle, will target office and hospitality assets primarily on the West Coast. The fund exceeded its $350 million target with $400 million of equity commitments and a $12 million GP commitment. Headquartered in Hong Kong, Gaw established a U.S. presence in 2013 and now has approximately 30 professionals based in Los Angeles.

Amundi launches senior real estate debt fund. French fund manager Amundi has launched a commercial real estate debt fund and announced a segregated lending mandate, marking its initial foray into the property lending market. The firm is aiming to raise up to €500 million to invest predominantly in loans with floating interest rates. The fund aims to lend between €30 million and €50 million per asset, with 50% to 70% leverage. In addition, through a segregated mandate, Amundi will invest €300 million on behalf of Crédit Agricole Assurances, the insurer of the firm’s parent Crédit Agricole Group. The mandate will have a more “defensive profile” than the fund for external investors.

“We are aiming to raise between €350 million and €500 million and are confident of being able to invest this swiftly, exploiting our relationships with players across eurozone senior debt.” – Bertrand Carrez, Head of Real Estate Debt, Amundi

 

PEOPLE MOVES

Blackstone waves a rare goodbye to one of its leaders. Stuart Grant, senior managing director and head of real estate asset management in Asia-Pacific, will be moving to London to join property developer Stanhope in a newly-created role of managing director in September. He wraps up an 18-year tenure at Blackstone, during which time he spent eight years growing the firm’s Asia business. At Stanhope, Grant will be working alongside chief executive David Camp, ultimately to take up the leadership role once Camp retires.

Cushman & Wakefield appoints student housing capital markets team. The firm has appointed student housing professionals Travis Prince and Victoria Marks to its Student Housing Capital Markets team. With extensive industry experience, the team will maintain a national reach within the student housing industry. They offer full-service capital market capabilities including the acquisition and disposition of student housing assets across the United States.

 

NOTABLE TRANSACTIONS

Greystar Real Estate Partners seeks buyer for $1.2 billion apartment portfolio. The 13-property portfolio, valued at $1.2 billion, consists of eight properties in California (including two in L.A.) and five properties in Virginia, though Greystar did not disclose the specific locations. Combined, the package includes 3,374 units spread across newer, core properties and value-added assets.

 

LIMITED PARTNER NEWS

 

Employees Retirement System of Texas (Texas ERS) has committed $100 million to Digital Colony Partners. The infrastructure fund invests in data centers and cell towers globally. The $28.5 billion public pension currently allocates 9.18% to real estate, below its 12% target.

Florida State Board of Administration (Florida SBA) has committed $100 million to AEW Value Investors Asia III. The third fund in the Asian series managed by AEW focuses on high-growth gateway cities (Hong Kong, Singapore, Seoul, Shanghai and Taipei) and opportunities in retail and office properties. This commitment is the first made by Florida SBA in the AEW fund series, in a move to help the pension fund diversify its real estate portfolio. The $197 billion public pension fund currently allocates approximately 8.6% of its total assets to real estate, below its 10% target.

New York State Common Retirement Fund (NY Common) has committed $150 million to Mesa West Core Lending Fund. The open-ended real estate debt fund focuses on first mortgage loans across the U.S. Mesa West Capital is a new relationship for NY Common. The $209 billion pension fund currently allocates 6.5% of total assets to real estate, below its 10% target.

Tennessee Consolidated Retirement System committed $150 million across three real estate funds. The three funds include: GreenOak U.S. Fund III, a value-add fund targeting office and multifamily properties across the U.S.; Savanna Real Estate Fund IV, an opportunistic fund primarily targeting assets in NYC; and CBRE Strategic Partners U.S. Value 8, value-add fund with a $1.5 billion target. The $49 billion public pension currently allocates 7.7% to real estate, below its 10% target.

Teacher Retirement System of Texas (Texas TRS) committed $150 million to PCCP Equity Fund VIII. The fund is an opportunistic vehicle that targets office, multifamily, retail and industrial assets across the U.S. So far, the firm has raised $486 million for the strategy. The fund’s predecessor held a $601 million final close in August 2016, surpassing its $500 million target. The $148 million public pension currently allocates 11.6% of assets to real estate, below its 14% target.