Roger Orf's London office houses numerous mementos of past glories. One is a model of a Santa Fe train. It marks a railroad deal he once worked on with former US Treasury Secretary Henry Paulson when the pair worked together at Goldman Sachs in the 1980s. A couple of decades later and Orf now has a rather more contemporary “trophy” to add to his collection – that of European industry figure of the year in the 2008 Global PERE awards. In 2008, Orf was elevated to president and chief executive of Citi Property Advisors – a business that was established in 2004 in rather happier times. As global head of a large institution he is, unfortunately, in a minority. How many other Europeans are able to say they lead a large global platform for a Wall Street institution? Since taking over from Joseph Azrack last summer, Orf has been busy steering the business through choppy waters at the same time as doubling as head of Citi's European investments. It's something that got him noticed.
European Deal of the Year
1. AREA Property Partners, 50% stake in Capital & Regional's German business
2. RREEF/GREF (Generali Group/Borletti Group/Pirelli Real Estate), KarstadtQuelle department store
3. Citi Property Investors/Gazit-Globe, Meinl European Land
It might be difficult to predict a good deal with so many unknowns, but AREA Property Partner's acquisition of a 50 percent stake in the German business of Capital & Regional looks to be a fair bet. What AREA did was acquire a stake in an income producing portfolio of big box retail assets for €65 million. For that money, AREA gained half the interest in a portfolio of 50 properties valued at €668 million (as at the end of 2007). The firm didn't have to raise financing to acquire the stake because existing debt structures were already in place. The swap rates don't appear to be too bad even by today's cheap standards and the portfolio is performing. If financing hadn't already been in place, it looks as though the deal would not have happened given the size of the portfolio. It goes to prove that spotting a deal that doesn't require debt is a skill worth having.
European Firm of the Year
1. Citi Property Investors (Europe)
2. AREA Property Partners (Europe)
3. JER Partners (Europe)
In 2007, there were prizes for staying out of the market when others were still loading up on debt. 2008 was different. It was about knowing when to walk on by, and also having the guts to invest. Citi Property Investors managed to tick both boxes. Apart from avoiding banana skins, the most noteworthy activity was a €800 million investment along with Gazit-Globe in Austria-listed Central and Eastern European developer Meinl European Land, which owns assets such as the Galeria Copernicus in Warsaw. The risks are many, but the investor believes it will ultimately be in the money. Having introduced new management and improved transparency, the firm is now working to improve the capital base and ultimately the share price. Citi has placed a big bet on Central and Eastern Europe. It remains to be seen how this investment works out, but as other property funds go to the wall or require knights in shining armour to save them, Citi appears to be a savvy survivor.
European Exit of the Year
1. AIG European Real Estate Partners, Pokrovsky Hills sale
2. Niam/Goldman Sachs Whitehall Street, Finnish Pasaati shopping centre sale
3. ABP Investments, sale of KFN to ING Real Estate
AIG's global real estate platform might have been put up for sale, but the business has something to cheer. Its exit in 2008 from an investment in Moscow made the firm a good profit after just two years of ownership. Rather than a Russian deal, this felt more like a US transaction given the details. Pokrovsky Hills is a 207-townhouse complex outside of Moscow, mainly occupied by foreign – primarily American – nationals. It was originally developed by US firm Hines and is close to the Anglo American School. AIG and its partner, Deutsche Bank, sold the residential complex for a reported $350 million to a Wall Street firm – Goldman Sachs, which in turn acquired it through a variety of funds, including the Whitehall Street Real Estate funds. With AIG likely to be acquired later this year, AIG Real Estate fund management may not live as a name much longer, but at least one of its transactions goes down in the annals of history.
European Fundraise of the Year
1. Carlyle Europe Real Estate Partners III, €2.2bn
2. Apollo European Real Estate Fund II, $1.4bn
3. Perella Weinberg Real Estate Fund I, €1.2 bn
Carlyle's French head of Europe, Eric Sasson, has been building a team in the region since the early 2000s. Testament to his progress came last June when the firm raised €2.2 billion for its third vehicle focused on the region. Unlike on previous occasions, Carlyle tapped new institutional investors from the US who had previously only invested in US-focused funds sponsored by the firm. Carlyle raised the fund at a time when people were raising questions about opportunities in the real estate sector. For Carlyle Europe Real Estate Partners III it was a great show of confidence. When the final ink dried on final commitments, the team had already committed to 10 assets for €715 million. There will no doubt be some challenges in the portfolio, but the vehicle is flexible enough to deploy remaining capital. The game plan for Carlyle's European vehicles to date has been fairly simple: the repositioning and letting of large single asset buildings or development of real estate.
European Placement Agent of the Year
1. Credit Suisse Real Estate Private Funds Group
2. Probitas Partners
3. M3 Capital Partners
Can you spot the recurring theme? The Credit Suisse franchise collected more votes than any other in the European category of placement agent of the year to add to its glory in the North American and Global categories. There are seven professionals working out of the real estate private funds group in London, and they are pretty busy. All the mandates the team won last year have extended into 2009 as managers continue to raise capital for debt vehicles, UK-focused funds and emerging market strategies. Combined with some Asia-focused funds, they are matching the amount of equity the team is raising in the US. Credit Suisse's European team is also seeing less firsttime funds and more follow-up vehicles as the flight to quality crosses the Atlantic. Fredrik Elwing, head of distribution, and head of project management Eric Lemer's teams will be hoping to close the funds they are currently marketing later this year.
European Debt Provider of the Year
3. Banco Santander
Considering the fate of close rivals, it was an achievement for Eurohypo to underwrite around €13.5 billion of business in the first three quarters of last year before the Pfundbrief market closed down. Helped by the withering of other banks, Eurohypo has been trying to grab market share and has even been snapping up commercial mortgagebacked securities on the cheap according to chairman Frank Poerschke in an interview with Reuters. The future is not so clear. Eurohypo is owned by Commerzbank, which became the first bank to take advantage of the German government's financial markets stabilisation fund (Soffin). Media reports have recently suggested that, following the firm's €8.2 billion capital injection, Eurohypo and German rival Hypo Real Estate could be acquired by Deutsche Bank and merged together. In today's world, that kind of deal cannot be entirely ruled out.
European Law Firm of the Year (Transactions)
1. Clifford Chance
2. Paul Hastings
HSBC's repurchase of its Canary Wharf headquarters in London didn't just benefit the bank. It also helped the lawyers too. Clifford Chance advised on the original purchase of the office tower by Spain's Metrovacesa. Then in the full glare of publicity it advised the development firm again – this time to unravel the transaction. There were more private briefs too. One was to advise US secondary specialist Madison International's Liquidity Fund III on its acquisition of Lehman Brother's joint venture interest in a London office property. It may look a bit strange now, but the firm's real estate transaction team, led by European head Mark Payne, also advised Germany's Hypo Real Estate acquisition of New York-based commercial mortgage REIT Quadra Real Trust, which Hypo partially owned. Clifford Chance has also helped craft a JV in the UK between British fund, Pinder, Fry and Benjamin and Germany's eshelter facility services.
European Law Firm of the Year (Fund Formation)
1. Clifford Chance
2. Paul Hastings
Even rivals admit Clifford Chance is hard to knock off its perch given the quality of its top people, size and clients. For the third year running, the firm has won a top PERE award for its fund formation work. Among highlights was the €750 million fundraise for AEW's pan-Europe opportunity vehicle, AEW'S largest to date. In addition to that, Clifford Chance worked for another longstanding client, Pramerica (part of the Prudential Financial corporation). PRECO IV is the latest offering coming out of Pramerica. The roll call of other clients the firm has worked with of late include Tom Barrack's Los Angelesbased Colony Capital, the UK's Rockspring, HSBC Bank and US institutional fund manager BlackRock. It was a tough year for everyone, lawyers included, but it's nice when you have such firm friends. Clifford Chance's real estate fund formation team is led by Nigel Hatfield.
European Limited Partner of the Year
1. ABP Investments
2. The Wellcome Trust
While many LPs are cited for their performance, being particularly outspoken or for being powerful cornerstone investors, others get noticed for involvement in large capital transactions. Dutch fund ABP certainly fell into the latter category after two big deals in 2008. In January, it completed the €1.6 billion sale of Netherland's property company KFN to ING Real Estate. In July it agreed to buy a Norwegian shopping centre company, Steen & Strøm, for €2.7 billion. The absence of leveraged buyers in Europe allowed ABP, whose Europe and Asia real estate investments are led by Patrick Kanters, to swoop in. At the heart of the deals is ABP's ongoing strategy to diversify outside of its native borders and into new markets. In order to generate higher risk adjusted returns, ABP combined non-listed investments with real estate securities in one strategic fund. As one of the most important LPs for real estate funds, ABP is now also turning into the competition.
European Advisor of the Year
1. Partners Group
2. The Townsend Group
3. Capital & Marketing
As mandates go, this one is pretty big: devise a global real estate strategy for the €245 billion Norwegian Government Pension Fund. Better known as Norway's “oil fund”, Partners Group was appointed advisor to the fund in February last year after impressing officials at the Ministry of Finance in Oslo. Up until then, the fund had not taken steps to turn any of its black gold into bricks and mortar. Winning Norway's first ever brief was therefore a significant coup for Partners. The advice to the oil fund in the short term is fitting for a sage: wait. Since Partners Group came on board there have been no investments and certain regulatory hoops still need to be cleared. However the fund is expected to make investments some time this year. Will it choose an opportunity fund, and if so, which one? Whatever the decision it puts Partners Group and its co-heads of real estate, Pam Alsterlind and Claude Angéloz, in a powerful advisory position.
European Developer of the Year
1. Tishman Speyer
2. British Land
Tishman Speyer gritted its teeth in the development game last year, creating value with its projects in a declining market. The New York-based firm made good inroads in Germany, where it has been developing a 67,000-square-foot office complex called the Opernturm Tower in Frankfurt's financial district. The firm has leased 60 percent of the building to businesses such as Swiss bank UBS. The firm almost managed to exit the deal last year, only for German fund manager KanAM to cancel an agreement at the last minute. Though the acquisition could have been closed without debt, redemptions at KanAM's open-ended fund put paid to the deal. In Europe, Tishman completed the renovation and full leasing of two office properties, one in Aldwych, London and another in Brussels, Belgium.