A year to remember

In a year that witnessed one of the most active and dynamic periods in the history of the private equity real estate industry, it was only natural that 2006 would also herald our first annual awards.

The 2006 Global PERE Awards, established together with our online news site, PrivateEquityRealEstate. com, were created to highlight the most noteworthy happenings of the past year. But they were also created to be as interactive as possible, incorporating the opinions of the industry and reflecting the diversity of the global asset class. Unlike other awards that are chosen by a select group of editors in smoke-filled newsrooms, The 2006 Global PERE Awards were voted on by our readers across the globe—the only awards for the industry as voted directly by the industry.

From the leading personalities of 2006 to its best emerging markets, this was your chance to have a say on the people, firms and deals that shaped the industry over the past year. And what a year it was.

From the largest private equity transaction ever— Blackstone's initial merger agreement with Equity Office, a deal that got only bigger in 2007—to the biggest real estate fund yet (Blackstone again), 2006 saw records fall in staggeringly quick succession. And judging by the deals announced in the last few weeks of the year—the $17 billion takeover of Harrah's by Texas Pacific Group and Apollo; another ski resort acquisition by Fortress; the purchase of Cushman and Wakefield by the Agnelli family; Apollo's announced $9 billion purchase of Realogy—private equity real estate investors showed no signs of slowing down in 2007. A sentiment best personified by the bidding war that erupted for Equity Office at the beginning of the year.

Yet 2006 was more than just a time of feverish activity in the US. More than any other period on record, last year demonstrated the reach of the asset class across the globe. In the Asia-Pacific region, for example, 2006 saw the largest private equity real estate funds raised for both Australia (AMP Capital) and India (IL&FS), as well as one of the largest deals ever seen in Japan (KK DaVinci's acquisition of a stake in Pacific Century Place). In Europe, Fortress listed its Gagfah residential portfolio, creating the largest publicly traded real estate company in Germany. Morgan Stanley made its first investment in the Russian property markets. And in the UK, Liquid Realty completed the largest real estate secondary transaction ever.

Those were just some of the deals and firms that were voted on by the hundreds of participants in our online poll. The awards were divided into eight separate categories and three different geographic regions. And though some categories generated more votes than others—everybody it seems has an opinion on personality of the year—the overall turnout was both robust and heartening. We anticipate the awards only growing in size and stature in the years to come.

Among the results that captured our attention this year: the impact of Blackstone and the Equity Office deal in our voting results for North America; the diversity of geographies and firms represented in Europe; and, alas, the preponderance of people voting for themselves despite our rules prohibiting such activity—personality, it seems, is not limited to those who topped our awards lists. (On a related note, we had to strike such votes as invalid.)

Yet perhaps the most striking aspect of our results was the lack of any dominating presence. With the exception of Blackstone, which won in two different categories, no other firm took home more than one prize. That is partially a reflection of the breadth and depth of the market in 2006, particularly in Europe and Asia, where deal sizes still paled in comparison to the mega-transactions seen in the US.

But it is also a reflection of the maturity of the asset class. Ten years ago, a handful of firms dominated the entire industry. Today, a growing number of practitioners have emerged, each doing their own part to reshape the industry. Which of them won the highest accolades from their peers in 2006? Read on to find out.

Sam Zell
North American Personality of the Year
No one can accuse Sam Zell of having a bland personality. The legendary real estate investor hosts limousine-chauffeured scavenger hunts, travels the world on the back of a Ducati and spends six months designing his annual holiday gifts—last year's music box included original lyrics set to the tune of Burt Bacharach's Raindrops Keep Falling on My Head. The chorus: “Capital is raining on my head.”

Last year, Zell understood that sentiment better than most. In November, the office empire he built over two decades, Equity Office Properties, agreed to be acquired by The Blackstone Group for $36 billion, the largest private equity deal yet. That transaction, which runs like a theme throughout these awards, was notable not just for its size, but also for the way Zell orchestrated the behindthe-scenes action. After hinting at a “flirtation” with CalPERS early in the year, Zell began secretly negotiating with Steven Roth of Vornado before ultimately agreeing to Blackstone's $36 billion deal—a deal which still left the door wipe open for other suitors, culminating in the fierce bidding war that erupted in 2007.

Earlier in his career, Zell anointed himself “The Gravedancer” for his ability to acquire distressed properties on the cheap. But after the year he had in 2006, perhaps another nickname is more appropriate— Sam Zell, “The Rainmaker.”

The Blackstone Group
North American Firm of the Year
Where to begin in describing the year that was for The Blackstone Group? First, in February, the firm continued its run in the hotel sector by announcing the acquisition of Meristar Hospitality for $2.6 billion. One month later, it was office REIT CarrAmerica that fell to the private equity firm, this time for $5.6 billion. And in June, Blackstone not only participated alongside Brookfield Properties in the $9 billion acquisition of Trizec, it also closed on $5.25 billion for Blackstone Real Estate Partners V, the largest private equity real estate fund raised to date.

But all of that, of course, was just a prelude. Right before Thanksgiving, Blackstone announced a $36 billion merger with Equity Office Properties, the largest private equity deal ever—and one that would get even bigger before all was said and done.

Though Blackstone's LBO arm is traditionally viewed as one of the most powerful in the world, it is actually the real estate unit, led by Jonathan Gray in the US, which has an even better track record. Whether or not Gray and his team can continue their success remains to be seen, but Blackstone certainly looks intent on trying. The firm is expected to raise a $10 billion real estate fund in 2007, suggesting that 2006 itself may just be a prelude to something even bigger.

KSL Capital Partners
North American Emerging Firm of the Year
The principals of KSL Capital Partners may not exactly be the new kids on the block—co-founder Mike Shannon was the chief executive officer of Vail Resorts in the mid-1980s before teaming up with KKR to form KSL Recreation in 1992—but it was in 2006 that the two-year old firm truly came into its own.

In September, KSL closed its debut private equity real estate vehicle, focused on the travel and leisure sector, on just over $1 billion. Two months earlier, the firm had made the fund's debut investment: the $56 million acquisition of the Rancho Las Palmas Resort & Spa in La Quinta, California. And just before the year ended, KSL closed on one of the largest deals ever seen in the golf sector: the $1.8 billion acquisition of Clubcorp, which owns approximately 170 private golf clubs and more than 60 sports and business clubs across the US.

While at KSL Recreation, Shannon and his team, including KSL Capital co-founder Eric Resnick, put $524 million of equity to work in 15 different investments. According to Shannon, the 13 investments realized thus far have generated a return of five times their initial equity.

If 2006 is any indication, Shannon, Resnick and their investors are looking to replicate that earlier success—and shake off the “emerging” label in the process.

Equity Office Properties
North American Deal of the Year
It was a deal that had all the elements: a real estate legend; one of the most successful private equity firms in the world; a slew of investment banks lined up to finance one of the largest debt packages in history; the spurned ambitions of both the biggest pension fund in the US and one of its most highly respected REITs; and, perhaps most importantly of all, the largest price tag ever seen in the private equity industry.

And that was just when the deal was announced.

When the news of Blackstone's $36 billion planned acquisition of Equity Office Properties emerged in November, it set a new benchmark in the private equity real estate industry. No public company was too big and the balance of power between public REITs and private equity had very clearly shifted to the latter.

The acquisition of Equity Office will most likely be remembered for the bidding war that emerged between Vornado and Blackstone in early 2007, but it was in 2006 that the deal first made its mark. And it was in 2006 that something else, perhaps even more important, became apparent. For years, private equity real estate has stood in the shadows of its sister asset class, private equity, but the Equity Office transaction vaulted the industry forward in a way that no other deal could. Now, the asset class finds itself in the limelight and on the front pages. Things may never be the same.

Morgan Stanley
North American Fundraising of the Year
Morgan Stanley may not have raised the largest private equity real estate fund of 2006—that honor fell to The Blackstone Group's $5.25 billion vehicle—but it certainly raised the most capital overall. First up was the firm's fifth global opportunity fund, which closed on $4.2 billion in March, an amount that would have satisfied more than most. But then, six months later, in the space of one week, the firm closed two more funds: MSREF V US, a $1.8 billion vehicle focused on the US market, and MSRE Special Situations Fund III, which closed on $2.2 billion.

Morgan Stanley's limited partners have apparently not tired of opening their purse strings to the investment bank. Part of the reason no doubt lies in the firm's track record. Another is the significant exposure most of them are getting to international markets, where a significant portion of Morgan Stanley's real estate capital is flowing. Led by co-heads John Carrafiell and Jay Mantz, the firm made significant inroads in China, India and Russia in 2006.

At the end of last year, the investment bank began making even more significant inroads into its investors' wallets. Morgan Stanley once again hit the fundraising trail, this time for its sixth global opportunity fund, MSREF VI. The target: $8 billion. The goal: the largest private equity real estate fund ever. The prediction: get ready for even more.

Brazil
Emerging Market of the Year (Americas)
Though technically in South America, Brazil nevertheless got the nod from our voters, indicating just how hot the country has become. Of course, Brazil has been a favorite emerging market for decades, a distinction that does not bode well for the earliest movers into the country. Yet after years of political turmoil, inflationary economic policies and extraordinarily high interest rates, the largest country in South America is beginning to show the first signs of stability. And in 2006, that stability drew some of the most experienced real estate investors in the world to its shores.

In 2006, Equity International, Caisse de depot and Ontario Teachers all made investments in the country's retail sector, while Hines and Tishman Speyer were equally active in the commercial office arena. At the same time, Brazil's buoyant equity markets were providing a liquid exit for private equity real estate investors—both Equity International and Brookfield were able to take residential developers public in 2006. Given all that activity, it was small wonder that both Morgan Stanley and The Carlyle Group are gearing up Brazilian investment programs.

Nevertheless, investors still face significant challenges in Sao Paolo and beyond. Attractive debt financing is difficult to secure, skilled operating partners are in short supply and the legal system is notoriously slow and opaque. But that, of course, is the definition of an emerging market.

Private equity real estate investors in Brazil no doubt hope that it doesn't stay emerging for very long.

Merrill Lynch
North American Bank of the Year
By any measure, 2006 was a banner year for real estate finance. CMBS issuance hit record levels, private equity firms tapped huge debt packages to acquire the country's largest REITs and billions of dollars of property-related financing fees were showered on Wall Street's largest investment banks. But it was Merrill Lynch that got the nod, likely due to its financing role in two of Blackstone's largest deals, Meristar and Trizec, as well as the $5.4 billion acquisition of Stuyvesant Town.

In the Trizec deal, to take one example, Merrill reportedly stepped up to provide a $5 billion bridge to Blackstone in the final round of bidding—a key factor in sealing the transaction. And while Merrill was not part of the lending consortium in the Equity Office deal, it still played a significant role, serving as financial advisor to Sam Zell and Co.

The year nevertheless ended on a bittersweet note for the investment bank, as its global head of commercial real estate, Tom Saylak, left the firm—a move motivated, in part, by Merrill's decision not to launch its own private equity real estate fund. While that may have been bad news for Saylak, it was likely reassuring for many of Merrill's private equity real estate clients. In 2006, Merrill proved it can be both a potent lender and a savvy advisor; for the time being, however, it won't be a competitor.

North American Notables

Emerging Firm of the Year: RLJ	Deal of the Year: Albertson's
The six-year old private equity real estate firm started by BET	At $17 billion, the buyout of the grocery store chain was not only
founder Robert L. Johnson had a banner year in 2006, not	one of the largest deals of 2006, but also one of its most com-
only raising $743 million for its second hospitality fund, but	plicated—seven firms were involved in the winning bid, which
also spending most of it in the $1.7 billion acquisition of a	divided the company's properties among a Cerberus-led consor-
100-hotel portfolio.	tium, grocery chain superValu and drugstore operator CVs.
Bank of the Year: JP Morgan	Law Firm of the Year: Jones Day
As the leader in the leveraged loan market, this investment	Given the level of fundraising activity seen in 2006, the law firm
bank has deep ties with all the major Us private equity firms—	certainly kept busy advising long-term client The Townsend
in 2006, it was a fnancial advisor to the TPG/Apollo consor-	Group in 2006. Jones Day also worked with Morgan stanley
tium on Harrah's and the lead underwriter on Apollo's an-	on the $1.9 billion acquisition of Town & Country and a $2
nounced acquisition of real estate broker Realogy.	billion joint venture with Duke Energy's real estate arm.

Carlo Puri-Negri
European Personality of the Year
When he wasn't wining races in the Mediterranean aboard his yacht Atalanta II, Carlo Puri-Negri, the suave chief executive of Pirelli Real Estate, was busy striking deals, setting up joint ventures and floating funds in Italy, Germany, Central Europe and the UK. Oh, and in his spare time, he also helped persuade Italy's government to backtrack on new real estate taxes, as well as encouraged the introduction of an Italian REIT. Not bad for a year's work.

Under his stewardship, Pirelli cemented its reputation as the top real estate firm in Italy, but it also caught the eye of real estate professionals across Europe. Approximately 14 percent of Pirelli Real Estate's estimated €15 billion of assets under management is now located outside Italy.

Although Pirelli is a listed company, it manages more than a dozen unlisted funds and joint ventures. Within the last 12 months, Puri-Negri set up a €1.5 billion Italian hotel fund with Merrill Lynch, listed the industrial opportunistic fund Spazio on the Alternative Investment Market with Cypress Grove, struck up a joint venture with France's Calyon to buy non-performing loans across Europe and partnered with RREEF in the acquisition of the German property company DGAG. And there was still time for Puri-Negri to form a second joint venture with Cypress Grove, this time to invest in the Polish residential sector. Expect to hear more from this busy man in 2007.

RREEF
European Firm of the Year
RREEF, the real estate and infrastructure arm of Deutsche Bank, had a storming 2006, investing €4 billion across Europe in 14 different countries. The firm, whose European operation is run by David Brush, seemed to be everywhere, investing in countries that are on the periphery of most investors' radar screens, including Portugal and Greece.

In 2006, RREEF mixed investments in emerging markets such as Russia with deals in established European locations. Among the year's highlights was the firm's joint venture with RBI, a St. Petersburg-based residential property developer, which has now completed four projects. It also snapped up French retailer Printemps for €1 billion and invested $210 million in three residential projects in Hungary and Bulgaria in joint venture with quoted Polish developer GTC. In Germany, RREEF made its first investment in the country by teaming up with Pirelli Real Estate to buy DGAG for €1.1 billion. In the UK, it bought the Little Britain office complex for £175 million.

And that was not all. At a time when infrastructure is the new buzzword in real estate, RREEF's infrastructure wing raised €1 billion for a European fund that has thus far invested in British ports group Peel Ports and an Austrian toll road. Apparently, the RREEF yacht moored at this month's MIPIM jamboree is smaller than last year. The firm, however, is clearly not scaling back in any way.

Benson Elliot
European Emerging Firm of the Year
Anglicized Marc Mogull can hardly be called a newcomer to the industry, having spent the past 20 years in private equity real estate. But the firm he runs, Benson Elliot, is only two years old and last year it raised €335 million for its maiden private equity real estate fund, Benson Elliot Real Estate Fund II.

From a modest office off London's Sloane Square, the fledgling company has invested roughly a quarter of its €2 billion-capacity fund since launching it last April. Its first deal resurrected a relationship Mogull first struck up while at Doughty Hanson Real Estate, which he co-founded, when Benson Elliot agreed to form a €120 million joint venture with Danish developer Sjaelsø Gruppen for a residential project in Copenhagen. Next up was the €114 million acquisition of Dusseldorf's Deutsche-Japanische Center, followed by a €240 million deal to buy six Paris offices in conjunction with Générale Continentale Investissements.

That last acquisition was led by ten-year Goldman Sachs veteran Trish Geery, who joined Benson Elliot from Dubai Investment Group, where she was head of global real estate. Other key hires in 2006 included Phil Irons from Schroders and Andreis de Gregorio from Lehman Brothers Real Estate Partners. In fact, Benson Elliot's ability to attract talent was a talking point among recruiters last year. If Mogull and his team have their way, there will be much more to talk about in the years to come.

Gagfah
European Deal of the Year
It is only fitting that the deal of the year occurred in Germany, and, in particular, the residential market, since it was one of Europe's hottest sectors in 2006.

Buying huge residential portfolios is nothing new. US opportunity funds and others have been playing that game for several years. But buying is one thing, exiting is quite another. And last year, Fortress was able to list a huge portfolio of apartments on the German stock exchange.

The floatation of Gagfah, which was valued at €4.3 billion, created the largest quoted residential property company in Germany. But almost more importantly, it blazed a new trail in the German private equity market, one that others are now looking to follow. Citigroup and Terra Firma, the owners of another large German residential portfolio, Deutsche Annington, are planning a similar IPO.

Fortress bought Gagfah in 2004 for €3.5 billion from the German government's social security and pension agency. At the time, the portfolio comprised 80,000 rental properties, but Fortress was able to expand that number to 150,000 units via subsequent acquisitions. It refinanced, cut costs and increased rents.

Last month, Fortress itself enjoyed an immensely successful flotation on the New York Stock Exchange. So while the firm is notoriously private and press-shy, it clearly does not mind the scrutiny of the public markets.

Citigroup
European Fundraising of the Year
Citigroup may be the largest financial institution in the world, but until recently it has been fairly quiet in terms of private equity real estate investment. That all changed in 2006, however, when Citigroup Property Investors, the firm's private equity real estate arm, closed CPI Capital Partners Europe on €1.6 billion. The opportunity fund, which promises returns of roughly 20 percent a year, is targeting Germany and Western Europe with a secondary focus on markets in Central and Southern Europe.

In Europe, CPI's team is led by Roger Orf, the former head of Goldman Sachs' European real estate arm, and chief investment officer Neil Hasson. Heading up the global team is Joe Azrack, the legendary real estate fund manager, who is based in New York. The US team also had a strong fundraising effort in 2006, corralling $600 million for its debut fund there.

Citigroup has so far invested more than 20 percent of its debut European vehicle, including investments in London offices and Lithuanian residential developments. The firm is already beginning to sell some of its holdings as well, not only auguring well for investors, but also for followup funds. Citigroup may be changing its name, but its clout as a financial powerhouse remains. Morgan Stanley and Goldman Sachs may need to watch out.

Russia
European Emerging Market of the Year
Despite all the usual grumbles about lack of transparency, corruption and difficult financing markets— to say nothing of the mysterious deaths of opponents of President Vladimir Putin—Russia is nevertheless attracting some of the largest real estate investors in the world.

Morgan Stanley Real Estate was among the big boys to enter the emerging market for the first time in 2006, striking two deals in three months: the acquisition of a 10 percent stake in RosEuroDevelopment and a 15 percent stake in RGI International.

Interest is revving up in the former Communist country due to strong economic growth, relatively high property yields and an undersupply of quality real estate. In 2006, Russian mobile phone giant VimpelCom signed the largest office lease ever when it took 31,600 square meters of space in central Moscow. Last year also saw the largest property financing by western banks when Merrill Lynch and Germany's Aareal bank refinanced the €160 million development of the Ritz-Carlton hotel in Moscow, which was developed by private equity group Capital Partners.

Real estate brokers have been ramping up their presence in the country, too. Last year, Richard Ellis, the world's largest property services firm, bought local real estate broker Noble Gibbons in order to take advantage of opportunities in the emerging market.

Hypo Real Estate
European Bank of the Year
German bank Hypo Real Estate has good reason to celebrate. In 2003, when the bank spun out of HVB Group, there was skepticism that the company could survive on its own; at the time its shares traded at €11.25. Three years later, however, those shares are now trading well over €50 on the DAX, and the bank has quickly established itself as a powerhouse in European property.

Deutsche Bank's record in 2006 was impressive due to its work on several high-profile IPOs, but Hypo, under European chief Harin Thaker, has clocked up sufficient deals to warrant its coronation, living up to the claim on its 2006 brochure: “Persistently seizing opportunities.”

It underwrote, for example, Morgan Stanley Real Estate's €513 million acquisition of Dutch development company AM. At the start of the year, Hypo also provided a €150 million construction loan to Multinational Logistics Partnership Group to develop a logistics park in Moscow—the first such loan in Russia by an international bank. In smaller, but no less hazardous markets, it performed equally well. In Lithuania, for example, Hypo financed Dawnay Day's purchase of a shopping center, while in Romania it underwrote GLL Real Estate Partners' acquisition of an office complex in Bucharest. But no year would be complete without a German residential deal: The firm loaned €228 million to German company Gehag, majority owned by Los Angeles private equity firm Oaktree Capital Management, to buy 5,300 homes.

European Notables

Firm of the Year: Fortress	Emerging Firm of the Year: Brockton Capital
The most active private equity real estate player in the most	This upstart firm founded by former Blackstone principal David
active market of the year, Germany, Fortress not only foated	Marks and ex-Merrill Lynch pro Jason Blanks not only raised
its Gagfah portfolio on the stock exchange, it also continued	approximately $300 million for their frst fund in 2006, they also
to buy up residential properties, including the €2 billion acqui-	participated in one of the largest healthcare deals of the year: the
sition of 47,000 properties from the German city of Dresden	£2.2 billion acquisition of General Healthcare alongside netcare,
for its listed Eurocastle investment vehicle.	Apax Partners and London & Regional.
Deal of the Year: Hotel Arts Barcelona	Emerging Market of the Year: Turkey
The sale of this hotel on the beach of Barcelona may not have	This country of more than 70 million people has not yet gener-
been one of the biggest deals of the year, but it was among	ated the interest seen in Russia, but with large investors such as
one of the year's most proftable. Patron Capital had already	Morgan stanley and Lehman Brothers circling Turkey's prop-
returned approximately 3.6 times its equity through asset sales	erty market, expect Istanbul to see a signifcant infux of private
and refnancing before fnally selling the property for €417	equity real estate capital in 2007 and beyond.
million in mid-2006.

John Grayken
Asian Personality of the Year
In the end, 2006 was a tough year for the reclusive John Grayken, at least in Asia. While the firm he runs, Lone Star Funds, is regarded by many as one of the most successful private investment groups in the world, it continues to face legal problems in Korea stemming from its 2003 investment in Korea Exchange Bank.

The firm had planned to sell Korea Exchange to Kookmin Bank for $7.4 billion last May—posting a great return on its $1.5 billion investment—but Lone Star scuttled the plans in November as its legal troubles continued.

In December, Grayken responded in no uncertain terms to an announcement that the Korean prosecutor was extending its investigation of the firm, which had already gone on for nine months. “There is nothing new in the Supreme Prosecutors Office's latest public announcement,” Grayken said in a statement. “It is the same old broad conspiracy theory that never made any sense and still is not supported by any hard evidence.”

Despite the firm's ongoing problems in Korea—and new questions about its purchase of the Star Tower in Seoul—Lone Star has had a wildly successful streak in Asia. In 2005, the firm sold its stake in Tokyo Star Bank for a seven-fold return and listed its portfolio of Japanese golf courses on the stock exchange.

Macquarie Global Property Advisors
Asian Firm of the Year
Macquarie Global Property Advisors closed 2006 on a great note. The firm sold the landmark Platinum building in Shanghai to a German open-ended fund for a reported $170 million—posting a healthy profit on the office property, which MGPA acquired from CapitaLand for $98 million a year earlier.

Led by former Lend Lease pro James Quille, MGPA closed its latest global fund, focused on both the Asian and European property markets, on more than $1.3 billion in 2005. Last year, then, was largely spent looking for acquisitions.

Long an active investor in the Asian markets, the real estate firm isn't afraid of emerging markets. Last year, MGPA was stalking deals in Thailand and China, as well as making inroads in Malaysia, where it made its first purchase. The firm bought three buildings in downtown Kuala Lumpur for RM680 million (€144 million; $185 million), including the 61-story Empire Tower, the 28-story, 571-room Crown Princess Hotel and the 11-story City Square Shopping Centre.

But it wasn't all new markets for the private equity real estate firm: Macquarie's executives spent their time in more established cities, as well, acquiring office buildings in both Hong Kong and Seoul.

Now that 2006 is passed, MGPA is no doubt hoping those acquisitions will eventually prove to be as profitable as Platinum.

IL&FS
Asian Emerging Firm of the Year
As one of India's largest infrastructure companies, Mumbai-based Infrastructure Leasing & Finance Services (IL&FS) might not be some people's idea of an “emerging” firm, but it is nevertheless a relative newcomer to the private equity real estate industry. Helmed by vice chairman and managing director Shahzaad Dalal, the firm's private investment arm, IL&FS Investment Managers, has launched a number of infrastructure vehicles over the past decade, but last year it closed its first fund focused solely on real estate.

The vehicle, which closed on $525 million last April, was one of the largest ever raised for investment in India. Not only that, it was able to attract significant commitments from US-based institutional investors, including such blue-chip LPs as the California Public Employees' Retirement System and the Oregon Public Retirement Fund, which both chipped in a reported $100 million.

IL&FS plans to develop properties with more than 50,000 square feet in the middle-income residential, IT-related office and retail sectors, in addition to mixed-use projects. And as the Indian real estate market continues to heat up, the firm is wasting little time in putting its capital to work. According to the firm, the IL&FS Realty Fund has already invested $177 million in seven investments thus far.

IL&FS has long been a dominant player in the Indian infrastructure market. If 2006 is any indication, they are looking to do the same in the country's burgeoning real estate industry as well.

Pacific Century Place
Asian Deal of the Year
It was a big Asian deal in a year of big, record-breaking Asian deals. This past fall, Japanese real estate firm KK DaVinci Advisors acquired the office portion of the Pacific Century Place Marunouchi building for $1.7 billion. The 39-story property in central Tokyo was owned by Hong Kong internet and telecommunications mogul Richard Li, who built up the Asian satellite television network Star before selling it to Rupert Murdoch for $950 million in 1995.

Tokyo-based buyer DaVinci, which has a reported ¥1 trillion ($8 billion; €6 billion) in real estate asset under management, says it plans to continue looking for deals in its backyard. The firm, founded in 1998 by Osamu Kaneko, was reportedly one of the first groups to launch an opportunity fund focused solely on Japan.

The Pacific Century deal, the largest single-asset transaction ever in Asia according to Merrill Lynch, was yet another demonstration of the resurgence of the Japanese economy. Long a distressed market, beset with bank failures and consolidation, Japan is seeing increased activity by international players looking to cash in on the country's revitalization. Around the same time as the Pacific Century announcement, US investment bank Morgan Stanley acquired the Akasaka Garden City building in central Tokyo for $523 million.

ING
Asian Fundraising of the Year
The real estate arm of insurance company ING has approximately €1.3 billion in assets under management in Asia, a small amount compared with more than €29 billion in North America, €20 billion in Europe and €5 billion in Australia.

But that's all changing. Shortly before Christmas, the Dutch firm closed on $350 million to invest in opportunistic projects in China.

Led by China head Richard van den Berg and Asia Pacific chief Dr. Robert Lie, the firm will scope out mid-range housing developments in the first- and second-tier cities of China, looking to capitalize on the country's growing middle class. For the fund's investments, it plans to pursue joint ventures with local developers.

This is not ING's first foray into China: The firm has been investing its own capital in the country for the past decade and was already working with developer Shanghai Forte Land on a $74 million, 150,000 square foot mixed-use development in the Hong Kou area of Shanghai. It also teamed up with property company Raycom International for two housing projects in Changsha, the capital city of Hunan Province. These projects, along with a proposed housing investment in Tianjin, will be included in the new opportunity fund's portfolio—something that no doubt piqued the interest of its limited partners.

India
Asian Emerging Market of the Year
The India-versus-China debate heated up last year—with a number of the largest international real estate players betting on both—but 2006 was the year India came into its own, with seemingly weekly announcements of new deals and new firms entering the country.

It's probably a good thing, as demand for real estate in the country continues to grow. The drivers behind India's residential growth include urbanization, higher disposable incomes and a growing home mortgage business, while the office sector is being helped by the often-discussed boom in the country's IT sector. The entry of global retailers is spurring retail development, while the hospitality sector is seeing a steady increase in foreign and domestic business travelers as well as tourists. And while there was still a lot of hand-wringing over the Indian bureaucracy, the country began loosening foreign direct investment laws in 2005 and now allows overseas groups to invest across property sectors.

Last year, a number of blue-chip firms closed on property funds focused on the subcontinent, including a $550 vehicle launched by ICICI Ventures, a $525 million fund raised by infrastructure firm IL&FS Group and a $630 million vehicle raised by Apollo and the Sun Group (which closed in 2007). As India's emerging economy continues to mature, expect many more property funds to follow.

Citigroup
Asian Bank of the Year
Despite the fact that Citigroup dumped its old corporate logo in early 2007, that red umbrella nevertheless provided a fitting symbol for the financial institution's real estate franchise across Asia in 2006. From landmark securitizations in China to Islamic debt facilities in Dubai, Citigroup's financing expertise covered the whole of Asia and beyond.

In China, for example, Citigroup led the first CMBS offering in the country's history, a $145 million securitization of a nine-property portfolio owned by Macquarie Wanda Real Estate Fund, a joint venture between the Australian bank and Chinese property developer Dalian Wanda. In 2006, the firm also helped finance the combination of the Singapore-based Raffles hotel chain with Toronto-based Fairmont Hotels, which was acquired by Colony Capital and Saudi prince Alwaleed bin Talal, who also owns a significant stake in Citigroup itself. The financing structure reportedly involved a significant amount of complexity given the geographic breadth of the combined company. Befitting its ties to the Saudi prince, Citigroup has also been one of the most active property lenders in the Middle East. In 2006, the bank arranged a $1 billion Islamic facility for Emaar Properties, the Dubai-based real estate developer's first debt offering.

As the private equity real estate arm of Citigroup, Citigroup Property Investors, makes a big push into Asia in 2007, look for the bank's financing activity to pick up even more steam.

Asia & RoW Notable

Firm of the Year: Morgan stanley	Emerging Firm of the Year: Xander
With investments in Indian developers like Bangalore-based	Launched by Harvard Business school professor and TA Associ-
Mantri Developers and new Delhi-based Alpha G:Corp De-	ates founder Arthur siegel and former Richard Ellis India
velopment, global investment bank Morgan stanley continued	property pro siddharth Yog, Xander Real Estate Partners shot
to expand its footprint throughout Asia in 2006 via its latest	out of the gate and closed this fall on one of the biggest Indian
$4.2 billion international fund. The firm also added to its al-	property deals of all-time: an investment in the Bandra Kurla
ready sizeable portfolio with investments in China, Korea and	Complex in suburban Mumbai that is valued well north of $100
Japan.	million.
Personality of the Year: Zain Fancy	Deal of the Year: Accordia Golf
He doesn't just have a cool name: As the head of Morgan stan-	Despite its relatively static post-IPO stock price, Goldman
ley's Asia-Pacifc real estate operation, Zain Fancy has spear-	sachs' listing of its Accordia Golf portfolio grabbed headlines
headed the firm's entry into emerging markets like China and	as the second links company to be taken from bankruptcy to
India, including its plans to spend more than $500 million on	the stock exchange in Tokyo—and one of the largest Japanese
the subcontinent and its acquisition of Hong Kong boutique	IPOs of 2006.
service apartment operator shama.