Increased LP appetite for GP stakes; Kayne Anderson RE closes on $1.8B; $350M in LP commitments

 

MARKET NEWS

More real estate managers are hitting the $100 billion AUM mark. According the 2018 Fund Manager Survey conducted by ANREV, INREV and NCREIF the average AUM across managers rose more than 22%, bringing the total real estate AUM to $2.8 trillion by the end of 2017. The 10 largest managers represented 38.6% of the total and for the first time, five real estate managers report having more than $100 billion in AUM. Blackstone, Brookfield Asset Management, and PGIM were the three largest managers in 2017.

LP appetite for GP stakes ‘disproportionately large’. Coller Capital recently released its bi-annual Global PE Barometer, reporting that at least 17% of LPs have already invested in GP-interest vehicles and another 19% will consider doing so. Another key finding of the survey indicates that the fear of missing out on their desired size of commitment has spurred well over half of LPs to commit to new funds at the first closing. In addition, four of five LPs believe that GP-led secondary transactions are set to become a routine part of the private equity landscape. The survey methodology and results can be found here.

 

CAPITAL RAISING UPDATES

JLL Spark launches $100 million proptech fund. JLL Spark, a division of JLL, is launching a new venture capital fund, the JLL Spark Global Venture Fund, which will invest up to $100 million in early-stage real estate technology companies. The venture fund will primarily make seed and series A investments, ranging from a few hundred thousand to several million dollars. It is being funded by JLL as the sole limited partner.

Kayne Anderson holds $1.8 billion final close for fifth fund. Kayne Anderson Real Estate Partners V (KAREP V) is the firm’s largest real estate fund to date, exceeding its $1 billion target and closing at its hard cap of $1.8 billion in just over a year of fundraising. KAREP V is an opportunistic fund that will primarily focus on healthcare-related real estate (senior housing, medical office, outpatient care facilities) and student housing in public university markets.

Man Group launches first RE fund since Aalto acquisition. The London-based firm has launched Man GPM US Residential Real Estate Fund to target the U.S. single-family residential sector. The new vehicle will focus on southeast and midwestern U.S. cities, as well as California, and will have a 40-60% target allocation for a buy-to-rent strategy, a 20-30% target for a build-to-rent strategy, and a 0-20% target for a build-to-sell strategy.

MCR closes $300 million hospitality fund. The U.S. hotel owner-operator has held a $300 million final close for MCR Hospitality Fund to target investments in select service and extended stay hotels throughout the U.S.

 

NOTABLE TRANSACTIONS

Oaktree JV acquires multifamily portfolio for $142 million. TruAmerica Multifamily, in partnership with Oaktree Capital Management, has acquired two multifamily properties in Phoenix and Las Vegas in separate transactions totaling $142.1 million. TruAmerica will undertake a significant capital improvement program on both properties.

“We like the long-term outlook for Phoenix and Las Vegas based upon positive demographics and the high demand for rental housing.” – Mark Jacobs, Managing Director, Oaktree

Kennedy Wilson sells $422 million multifamily portfolio. Kennedy Wilson (KW) has completed the sale of a six-property multifamily portfolio totaling 2,199 units located across four states (CA, NV, WA, and OR). The asset sales generated cash proceeds of $223 million, including net proceeds to KW of approximately $104 million. Year to date, KW has completed $202 million in multifamily acquisitions totaling 956 units in the Western United States and Ireland.

“These six properties represent the successful roll-out of our value-add asset management initiatives, and we are pleased to see those efforts create compelling value for our investors. “[The] sale enables us to recycle capital into other strategic investment opportunities.” – William McMorrow, Chairman and CEO of Kennedy Wilson.

 

LIMITED PARTNER NEWS

 

City of Tallahassee Pension Plan commits $40 million to 2 real estate funds. The $1.6 billion public pension fund committed $20 million each to AG Realty Fund X, a value-added real estate fund managed by Angelo, Gordon and TA Realty Associates XII, a value-add real estate fund targeting diversified properties across the U.S. The City of Tallahassee currently allocates 15.21%  to real estate, above its 15% target.

Kansas Public Employees Retirement System (KPERS) commits $60 million to J.P. Morgan Strategic Property Fund. The open-end real estate fund focuses on acquiring and holding high-quality stabilized assets across diversified property types in the U.S., utilizing maximum leverage of 35%. The $18.8 billion public pension currently allocates 8.9% to real estate, below its 10% target.

Orange County Employees Retirement System (OCERS) approves preliminary plan for real estate. The key elements of the new plan include rebalancing the portfolio to a 60/40 mix of core/noncore, rebalancing geographical U.S. exposure while opportunistically considering non-U.S. opportunities, targeting new commitments of ~$75 million and limiting manager concentration to 15% of the total private real estate program.

Pennsylvania Public School Employees’ Retirement System (Penn PSERS) committed $250 million to two real estate funds.  Penn PSERS committed $100 million to LEM Multifamily Senior Equity Fund V, a core-plus vehicle targeting multifamily properties across the U.S. and $150 million to AG Realty Fund X, an opportunistic fund targeting diversified properties across the U.S., Europe and Asia. The $55.9 billion pension currently allocates 9.9% of its assets to real estate, below its 11% target.

Teacher’s Retirement System of Illinois (Illinois TRS) hired three real estate management firms. Illinois TRS hired Bard Consulting, Org Portfolio Management and RCLCO Fund Advisors to be available on an “as needed” basis to evaluate and consult on co-investment opportunities for the $5.6 billion real estate portfolio. The public pension fund also rehired RVK as its general investment consultant for the next five years.