Insights

KAP’s insights on private equity investor relations and fundraising

 

Welcome back to the Re-KAP, where we share weekly highlights from the Real Estate Private Equity Marketplace (Oct. 25, 2017)!

 

MARKET NEWS

  1. Blackstone Reported Third Quarter Earnings. Blackstone’s (NYSE: BX) opportunistic real estate portfolio appreciated 5.5% during the quarter, exceeding the 4% rise in the S&P 500 index of large U.S. companies. During the quarter, the portfolio saw realizations of $3.1 billion driven by public stock sales of Hilton companies, the sale of a U.K. office property and assets in Equity Office Properties and Trizec. YTD realizations total $14.3 billion. Blackstone expects the sale of Logicor for €12.25 billion to close in Q4. The firm invested/committed $6.7 billion in Q3, with 60% of the investments outside the U.S.

  2. NYU’s Schack Institute of Real Estate hosted the first National Women in Real Estate Symposium. The day-long event in NYC tackled a range of industry topics—from the future of cities to multifamily sector outlooks—and featured all-female panels of real estate experts. One of the presentations at the symposium focused on the results of the KPMG study, Women in Alternatives. The findings suggest that the glass ceiling remains largely intact for women in the alternative assets space. Specifically, in real estate 58% of women believe that it is more difficult for women-led funds to obtain capital than their male counterpart.

  3. Family Offices are Challenging Private Equity. Bloomberg recently reported that family offices are looking beyond stocks and bonds to pursue direct investments in companies and real estate. Historically considered slow-moving and inexperienced investors, the most sophisticated family offices are morphing into investing giants. In the past few years, by leveraging patient capital, they have successful pursued direct investments and pitted their checkbooks against PE firms. They’re also going so far as to hire away top talent to develop their in-house investing capabilities.

LIMITED PARTNER NEWS

  • Pennsylvania Public School Employees’ Retirement System has committed $250 million to PIMCO Bravo Fund III, managed by Pacific Investment Management Co. The real estate fund will pursue an opportunistic strategy that seeks to capitalize on U.S. and European markets that have been influenced by regulatory reform (e.g., mortgage, real estate, and consumer markets). The $250 billion pension fund is an active investor in real estate as part of its alternative investment strategy.

  • Pennsylvania State Employees Retirement System (“PSERS”) approved three new real estate commitments. The $27 billion pension fund committed $50 million to SRE Opportunity Fund III, focused on opportunistic commercial real estate properties in the U.S. The board approved up to an additional $50 million to a discretionary co-investment fund. The board also committed $100 million to C-III Recovery Fund III, which will focus on value-add commercial real estate properties in the U.S. Lastly, the board approved up to $300 million to Blackstone Property Partners, to pursue core-plus commercial real estate properties in the U.S. and Canada. The pension fund is an active investor in real estate and maintains a 12% target allocation to the asset class.

  • Teacher Retirement System of Texas recently committed $400 million to an opportunistic U.S. real estate co-investment managed by Blackstone Group. The public pension committed an additional $150 million to AEW, of which $100 million is earmarked for their Value Investors Asia III fund and $50 million is going to a co-investment associated with the fund. Both Blackstone and AEW are existing relationships for Texas Teachers.

  • University of West Florida Foundation Inc, committed $2 million to Harbert United States Real Estate Fund VI. The $88 million foundation has previously committed to Fund IV and V of Harbert’s. As of June 30, the foundation’s real estate allocation was 1.9%.

  • Virginia Retirement System has committed $150 million to Blackstone Real Estate Partners Asia II. The fund, which will target warehouses and shopping malls in China, India, SE Asia and Australia, launched in the first quarter of 2017 and has already reached an interim close on nearly $5 billion in capital commitments. It’s predecessor fund closed on $5.1 billion in 2014. As of June 30, the $74.4 billion pension fund had a 12.6% allocation to real assets.