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2008 GLOBAL PERE AWARDS – Asia and rest of world awards

More than 10,000 votes were cast for the third annual PERE Awards and here – over the next dozen pages – we present the winners and runners-up of the Asia and rest of world awards. By Robin Marriott, Jonathan Brasse and Zoe Hughes. PERE March 2009


Asian Industry Figure of the Year

1. Simon Treacy, MGPA
2. Tim Grady, Merrill Lynch
3. David Schaefer, Citi Property Investors

It's been a rewarding year for Treacy, who led MGPA's Asian investment business to the largest fund closing in 2008. But above celebrating the sheer size of the vehicle, Treacy will have found satisfaction in the fact that more than 70 percent of investors in MGPA's Asia Fund II returned to the fold for the third outing. The nine-year Asia Fund III closed on $3.9 billion in June last year, the largest dedicated Asia fund raised by a private equity real estate firm. To cope with the firm's planned acquisitions and portfolios, Treacy also saw MGPA's head count in Asia almost double during 2008. The firm currently employs more than 200 real estate professionals in China, Korea, Singapore, Hong Kong, Japan and Malaysia. Having moved to Asia in 1996 from his native Australia, Treacy has spent 13 years living in Asia. Such extensive local knowledge has clearly paid off for Treacy as he takes the PERE Award for Asian industry figure of the year.

Asian Deal of the Year

1. The Blackstone Group, Shanghai Changshou Commerical Plaza
2. MGPA, land at Marina View, Singapore
3. Goodman Group, acquisition of Macquarie Group logistic JV interests

From Asia to South America, mainland Europe to Africa, all real estate sectors were impacted as banks literally closed their lines of credit. For most investors and fund managers the combination of falling asset values and an almost non-existent debt market meant it was time to hunker down and weather the storm. For The Blackstone Group, it was an opportunity to renegotiate. In June, the New York-based firm had agreed to buy a 90 percent stake of the Shanghai centre, Changshou Commercial Plaza, for RMB625.5 million (roughly €70 million; $90 million). By November, China's property markets had been hit by the credit crunch, giving Blackstone the chance to renegotiate the Changshou deal. Instead of paying Hong Kong-based financial services firm VXL Capital RMB625.5 million for 90 percent, Blackstone was able to close the deal for RMB536.7 million cash for a 95 percent stake. The deal has Blackstone eyeing China as a “very good” investment destination for its capital.

Asian Firm of the Year

1. MGPA
2. The Government of Singapore Investment Corporation (GIC Real Estate)
3. LaSalle Investment Management

While others were feeling the pinch of the credit crunch, the firm's Asian investment business, under the leadership of MGPA Asia investments chief executive Simon Treacy, closed on the single largest real estate fund in 2008. On 24 June, 2008, MGPA announced it had raised $5.2 billion for its MGPA Fund III, $3.9 billion of which was targeting Asia through the MGPA Asia Fund III. It brought the firm's total Asia fundraising tally to more than $6.4 billion. The firm, led by chief executive Jim Quille, first entered Asia just over 15 years ago, but MGPA closed on the lion's share of its equity in the last five years. Over that time, MGPA's AUM in Asia have grown from $500 million to $9.3 billion. The firm grew in that time from 20 employees to more than 200 employees. Treacy warned not to expect such unprecedented growth in 2009 with tight credit markets and deteriorating real estate fundamentals. However, with a buying window of three years, MGPA Asia Fund III can afford to be patient.

Asian Exit of the Year

1. Trikona Capital, sale of $156m of assets to German fund manager SachsenFonds Holdings
2. Gaw Capital/Morgan Stanley Real Estate, sale of Shama Luxe
3. RREEF, sale of Daewoo Securities building, Seoul

The India real estate market is young. Indeed, most private equity real estate activity took off in earnest in 2005. There are therefore few managers who have completed the buy-managesell cycle. However, in selling a portfolio of assets to German fund manager SachsenFonds Holdings, Trikona Capital was able to add its name to the list. Co-founded by Aashish Kalra, Trikona's AIM-listed fund, Trikona Trinity Capital, sold stakes in four special purpose vehicles (SPV) related to property developments in India. The deal, announced in September 2008, is expected to close this summer and caps off a trio of exits to the German fund manager. The developments owned by the SPV include residential and logistics schemes. The three sales are expected to bring about an average return for Trikona of 117 percent.

Asian Fundraise of the Year

1. MGPA Asia Fund III, $3.9bn
2. ARA Asia Dragon Fund, $1.13bn
3. LaSalle Asia Opportunity Fund II, $3bn

2008 may not have broken any industry records in terms of total fundraising for private equity real estate vehicles, but one important milestone was passed: 2008 was the year that Asia eclipsed the West. For the first time, Asian private equity real estate funds drew more capital commitments than North America-focused funds or Europe funds. It was also an Asia-dedicated fund that took the title of largest fund close in 2008. MGPA's $3.9 billion Asia Fund III closed in June 2008 just as the credit crunch started to take hold globally. Despite being more than 56 percent committed at the time of the close, MGPA said it was eyeing distressed real estate across Asia, particularly in Singapore, Japan, China and Thailand, in a bid to achieve 2x multiples and opportunistic returns of 17 to 20 percent. It is in Singapore though that MGPA is most focused, having invested more than $4.5 billion in the country, particularly at Marina View, over the past 15 months.

Asian Placement Agent of the Year

1. Macquarie Capital Advisors
2. Credit Suisse Real Estate Private Fund Group
3. Merrill Lynch

In the last three years, Macquarie Capital Advisors has helped raise more than A$12 billion (€6.1 billion; $7.8 billion) in equity for 26 real estate funds alone. Over the past five years, it has advised on the raising of more than A$50 billion of private equity, infrastructure and real estate funds. As one of the first global advisory firms to emigrate its private fund placement services to Asia Pacific, the firm has grown from just four real estate focused staff in Sydney to a team of 16 professionals spanning six offices globally today. While 2008 was a difficult year for many in terms of fundraising, Macquarie Capital Advisors – under the leadership of executive director Brett Robson – still managed to close on almost A$3 billion of equity for nine real estate funds, including A$400 million for Australia's Goodman Group and $1 billion for MGPA's mega-Asian property fund, MGPA Asia Fund III. It is a track record that ensured the company came out on top as PERE's Asian placement agent of the year award.

Asian Debt Provider of the Year

1. Sumitomo Mitsui Banking Group
2. JPMorgan
3. United Overseas Bank

Towards the end of last year, Asia's banks found themselves embroiled in the global debt crisis, but despite this Japanese lender Sumitomo Mitsui Banking Group (SMBG) kept its doors open. Japanese lenders, overexposed to hefty and plummeting securities, including real estate securities, started to turn their lending taps off in earnest from October. Banks reportedly cut their exposure to senior loans after being hit hard by the subprime crisis, which makes it all the more impressive that SMBG was still lending to international companies as late as December. In that month it contributed to a $121 million financing package to ProLogis, enabling the Denver-based firm to refinance bonds related to assets within its Japan Properties Fund II vehicle due to expire in January. Under better circumstances, this award would have likely focused on highest lending levels or on lenders of the best performing loans, but given current market conditions, being visibly active is enough.

Asian Law Firm of the Year (Transactions)

1. Paul Hastings
2. Baker & McKenzie
3. Allen & Overy

What further qualification does a law firm need to win this award than to have advised on the largest single asset deal in the largest country in Asia? Paul Hastings' crowning glory came in May when the firm advised investor and developer Asia Pacific Land on the final close of its record-breaking purchase of The Center in Shanghai. Asia Pacific Land paid RMB4.338 billion (€515 million; $650 million) to buy the 98,000-square-metre office building from a subsidiary of Hong Kong-listed corporation Hutchison Whampoa Group. The Los Angeles-based firm, led by chairman Seth Zachery, was one of the first US legal outfits of its kind to enter Asia, where it now has 190 staff across offices in Hong Kong, Beijing, Shanghai and Tokyo. Other than record-breaking single asset transactions, Paul Hastings' Asia team, led by David Blumenfeld and Joel Rothstein, also counts REIT transactions, securitisation of Japanese mortgage-backed debt, as well as auctions and financing, among its activities.

Asian Law Firm of the Year (Fund Formation)

1. Clifford Chance
2. Paul Hastings
3. King & Spalding

You've detected a recurring theme haven't you? Clinching its fifth win in the 2008 Global PERE Awards, Clifford Chance has once again confirmed its position as one of the world's leading fund formation law firms, particularly in Asia. Advising on more 20 transactions since July 2007 alone, the Asian real estate arm of the global law firm played a crucial role in one of Clifford Chance's biggest fund formations of 2008: Merrill Lynch's debut Asia property vehicle, the $2.7 billion Asia Real Estate Opportunity Fund. Led by New York, but structured in Singapore, (with half of Merrill Lynch's real estate team also in Hong Kong) Clifford Chance worked round the clock to close the mammoth fund. The sheer size of the vehicle was unique as well – there are not many first time Asia funds which are able to raise almost $3 billion and have an investor base like Merrill Lynch's. During 2008, Clifford Chance also advised on the formation of Istithmar's joint venture real estate fund with Standard Chartered, as well as UK property company Grosvenor's first joint venture with China-based Vega Property. The Standard Chartered/Istithmar Asian Real Estate Opportunity Fund is targeting $750 million, with $300 million in co-investments from the sponsors. The Grosvenor Vega China Retail Fund closed on $250 million and is targeting up to $1 billion of assets under management, focusing on retail and mixeduse projects in cities such as Shanghai, Beijing, Guangzhou as well as Tianjin, Chengdu and Nanjing.

Asian Limited Partner of the Year

1. The Government of Singapore Investment Corporation (GIC Real Estate)
2. Temasek Holdings
3. Queensland Investment Corporation (QIC)

For all its prowess as one of the most coveted LPs on the planet, GIC Real Estate will be remembered in 2008 more for its direct and strategic investments. The firm was established in 1982 as a department in The Government of Singapore Investment Corporation (GIC) to invest in real estate assets outside of Singapore using the city state's foreign reserves (reportedly worth more than $300 billion). During 2008 it took significant entity positions in a new joint venture with US REIT Host Hotels & Resorts to invest in Asia and Australia, and in Mexico Retail Properties, the developer and operator affiliate of Colorado-based private equity real estate firm Black Creek Group. But it was GIC Real Estate's $1.3 billion purchase of all of US logistics giant ProLogis's China platform and interests in Japanese property funds that really stood out. GIC Real Estate remains a formidable cornerstone investor and a first port of call for general partners worldwide.

Asian Advisor of the Year

1. Partners Group
2. Franklin Templeton
3. The Townsend Group

While Partners Group was busy winning a giant oil fund brief in 2008, it was also expanding its business in Asia. The Switzerlandbased advisor and fund manager opened a Beijing office to capture opportunities on the ground. Earlier in the year it also opened offices in Sydney, Australia as well as raising the Partners Group Asia-Pacific and Emerging Markets fund to invest in the best managers and lesserexplored real estate markets. Chief strategist for private equity real estate, Nori Gerardo Lietz, knew what she was talking about when she told the PERE Forum in London last summer that there would be a falloff of capital flow into the opportunistic sector – with a “disproportionate” flow of that capital heading to Asia Pacific and the emerging markets. Gerardo Lietz said the major theme of 2008 and 2009 would be the growth of specialised regional funds at the expense of general global vehicles.

Asian Developer of the Year

1. Hongkong Land
2. Keppel Land
3. DLF

Hongkong Land will feel it has entered 2009 in a much stronger position than many of its contemporaries. Last year, the developer, led by chairman Simon Keswick and chief executive YK Pang, brought the vacancy rate of its core portfolio in central Hong Kong to just 1.7 percent by the end of June. The achievement was in part thanks to leasing 105,000-square-feet of space to investment firm Fortis at Three Exchange Square. Hongkong Land controls five million square feet of commercial space, including the renowned Jardine House. Hongkong Land also brought its Singapore Marina Bay Financial Centre development to 60 percent pre-committed. In its half year figures, Hongkong Land posted a 56 percent rise in underlying profits and was one of the few developers to provide its shareholders with a $6 dividend payout. However, as Hongkong Land noted in November, its currently strong balance sheet is now having to weather uncertain markets.

MENA Firm of the Year

1. Investcorp
2. Abraaj Capital
3. Shuaa Capital

As the stalwart of the Gulf investment community, Investcorp has built its real estate operations into a force to be reckoned with. Investing in the US property markets on behalf its ultrahigh net worth and institutional investors, Investcorp has built a real estate empire that now has more than $2 billion in assets under management. In the 25 years since its inception, it has closed 218 transactions valued at more than $10 billion. 2008, however, marked a shift in the firm's strategy. During 2007, Investcorp was actively snapping up properties, including one of the largest transactions of the year – the $1.35 billion joint venture purchase of the New York office block 280 Park Avenue with Broadway Partners. By September 2008, the firm had deployed just $122 million. The change of direction was epitomised by the launch of Investcorp's $1 billion debt fund. As the credit crunch deepened at the end of 2008, the Bahrain-based bank saw increasing opportunities in acquiring whole loans, mezzanine loans and commercial mortgage-backed securities tied to US property. The Investcorp Real Estate Credit Fund was backed by an unidentified sovereign wealth fund, which committed $850 million to the venture. “We believe there are strong opportunities for strong returns throughout the US real estate lending markets,” said Investcorp managing director Mazin Al-Khatib at the time of the announcement in September. Investcorp's real estate team is led by co-heads Jonathan Dracos and John Fraser from New York. Traditionally the team of 16 has focused on the East Coast of the US, with two-thirds of Investcorp's dry powder invested in the office sector and on “opportunistic” plays. As was seen in September though, debt – and particularly mezzanine debt – has been growing in importance for the team. As of September, mezzanine investments made up around 4 percent of the real estate arm's portfolio: it's a figure we should expect to grow in 2009.

Latin American Firm of the Year

1. JER Partners
2. Prosperitas Investimentos
3. GoldenTree Insite Partners

When Michael Pralle took over the reins at JER Companies, he set about transforming the McLean, Virginia-based real estate firm into one of the largest property investors in the world. Part of that mission was to build JER's presence in emerging markets, notably in Latin America. Since taking over as president and chief operating officer in October 2007, Pralle – formerly head of GE Real Estate – has actively sought to establish JER in Mexico and Brazil. Having opened offices in Mexico City and Sao Paulo in the past year, Pralle says there is now a “very good window of opportunity” for real estate fund managers as the region reprices in the wake of the economic downturn. Speaking at the PERE Forum in November, he added that the first half of 2009 would offer the “best investment opportunity of our lifetime” in Latin America. JER now has 13 staff in the region, with director Sergio Hernandez leading activities in Mexico City and director Roberto Perroni overseeing operations in Sao Paulo. Perroni was formerly with Brazilian development firm, Camargo Corr^a Desenvolvimento Imobiliário, while Hernandez was with GE Capital Solutions Mexico. “Real estate is inherently a cyclical business,” Pralle told PERE in June. “In a cyclical business you want to be diversified by product type and be diversified by geography.”

African Firm of the Year

1. Actis
2. Old Mutual
3. Abraaj

Emerging markets are not for the fainthearted, not least when you're talking about Africa. For Actis, however, Africa is home. Primarily known for its private equity investments, Actis has been leading the field when it comes to African real estate. An investor in the continent for more than 60 years, the firm closed its first dedicated property fund, Actis Africa Real Estate Fund, in 2006 on $153 million. Targeting sub-Saharan Africa, the vehicle has since invested in across all property sectors, and particularly in retail. Actis counts countries as diverse as Ghana, Tanzania and Kenya as part of its geographic investment reach. During 2008 though, Actis' real estate team – led by David Morley – spread its real estate wings into India for the first time, investing $25 million in a joint venture project with Bangalore-based developer Vaishnavi Group. Actis hopes to take advantage of India's growing urbanisation by initially developing 925,000-squarefeet of residential and retail space at Yeshwantpur, a suburb of Bangalore. However, Actis' primary focus last year was definitely back in Africa, where the firm – fresh from exiting its retail project The Palms Mall in Lagos at the end of 2007 – celebrated the official launch of Ghana's first-ever modern mall, Accra Mall, in July. Actis first invested in the 22,900-square-metre retail centre in 2004 in a joint venture with local investor Joseph Owusu-Akyaw. As Owusu-Akyaw said at the time: “[This is] the realisation of my dream of having my fellow Ghanaians enjoy the same world-class shopping experience here in Ghana that they could until now have only seen outside their country.” Morley, a partner, leads the real estate team from London, having joined Actis in 1990 and helping set up the firm's South Africa team in 1995. Morley also played a key role in Actis' acquisition of Africa's Protea Hotels, South Africa's Infrastructure Finance Corporation and the management buyout of Engro Chemicals in Pakistan.