Arnold takes RE helm at ADIA as Schwab moves on – Exclusive

There has been a change at the top of the property division at the world’s biggest private real estate institutional investor, PERE can reveal.

The Abu Dhabi Investment Authority is understood to have informed staff in its real estate and infrastructure department today that long-time global head of real estate, Bill Schwab, is to step down and will be replaced by deputy global head Tom Arnold. The handover is expected to become effective on June 1.

The succession of Arnold into the job is the result of a planned transition after the ex-Cerberus executive was handed the additional responsibilities of supporting Schwab in developing and implementing the sovereign wealth fund’s overall real estate strategy on top of his role leading its Americas investing strategy. In PERE’s prior coverage of senior personnel movements at ADIA, it was suggested the move was part of an effort to groom Arnold for the global head role.

The handover draws the curtain on Schwab’s nine-year tenure leading the world’s biggest private real estate investor, which currently has more capital – $46.94  billion – invested in the asset class than any other investor, according to PERE’s annual Global Investor 50 ranking.

That tenure has been a time of significant change for ADIA. Beyond quadrupling the real estate team’s size from around 50 professionals to about 200 today, under Schwab’s watch, the investor underwent a number of strategic evolutions including a meaningful reduction in external manager relationships in favor of managing the majority of its investments internally. In 2009, about 70 percent of ADIA’s assets were managed by third parties. Today, about the same percentage is now managed internally.

ADIA’s investment approach has also changed with the times. During Schwab’s time, the investor has gone from favoring prime, traditional properties in major cities to engaging in sectors and markets including logistics development in China, mixed-use development in Chile and hotels in Brazil, Australia and New York.

One example of a nontraditional transaction for the state fund was its investment in the high-end residential Waterline Square development on New York’s Hudson River. The five-acre site will accommodate three residential towers when it tops out next year and is expected to be valued at more than $2 billion. Another is the €200 million deal with developer Bouygues Batiment Ile-de-France for the construction of a 38-story office tower in the La Défense business district of Paris. Indeed, since 2010, ADIA has become more active in development and currently is estimated to have as much as 50 million square feet of development planned or under way.

Schwab, who joined ADIA from investment bank JPMorgan, is expected to remain in the real estate industry. It is unclear what or where his next role will be at the present time.

Arnold was among ADIA’s first appointments after Schwab and has played a central role in formulating and executing the investor’s strategy. Before joining the sovereign wealth fund, he was a director and principal at New York-based Cerberus Capital Partners, where he worked for about five years. Other prior roles included managing director at ING Financial Services, director and principal at Credit Suisse and vice-president at Salomon Brothers, now Citigroup.

He will continue to serve as interim head of Americas for the time being, although it is understood a successor for that role will be appointed at a future date.

A spokesman at ADIA confirmed the appointment of Arnold as global head and the handover date, but declined to provide further comment.