Always the dollars

At the end of the movie Casino, Nicky Santoro, the Las Vegas mob enforcer played by Joe Pesci, is lured to a cornfield outside Chicago where he and his younger brother are buried alive. In a voiceover sequence just prior to that ill-fated meeting, Nicky explains the guiding ethos of Sin City, the mafia and, perhaps, even the private equity real estate industry: “The dollars,” he says. “Always the dollars.”

While private equity real estate practitioners may not be so singularly focused—or so brutal—“the dollars” are still the guiding principles for investors in the asset class. To make those dollars, of course, an opportunity fund first needs to raise some dollars of its own on the fundraising trail. It takes money to make money.

Beginning on p. 29, we analyze the current state of the global fundraising market and the dynamics shaping its development. In today's world, capital raising efforts are driven as much by dollars as they are by euros, rupees, dirhans and the like. As GPs scour the globe for investments, they are also finding limited partners who are increasingly willing to invest capital in opportunistic strategies. Fundraising, in other words, is no longer a local business.

One man who doesn't spend a lot of time fundraising is Robert L. Johnson, the founder of Black Entertainment Television. To jump start his real estate empire, Johnson put up $100 million of his own money to purchase a portfolio of Hilton hotels. His private equity real estate firm, RLJ Development, now manages $3 billion in assets. Our profile of one of the most highly regarded entrepreneurs in America begins on p. 24.

One area of the real estate market attracting its fair share of dollars is the senior housing sector. Driven by strong demographics and demand for non-traditional real estate investments, a lot of greenbacks are chasing the gray hairs. We analyze the trend on p. 46.

Of course, dollars are not everyone's cup of tea. Take Karl Marx, for example, whose writings described an alternative to capitalism. Today, however, Marx is dead, Marxism is ailing and capitalism is very much alive, which might explain how the German philosopher's childhood home has become a favorite stop for Chinese tourists (p. 4). Das Kapital, indeed.

Enjoy the issue,

Paul Fruchbom