Blueprint: Alan Yang’s spinout makes a fundraising splash, Blackstone rolls out red carpet for studio projects, Carlyle nears $8bn for CRP IX

GLP Capital Partners closes its debut US logistics fund on $2.3 billion; Blackstone and Hudson Pacific announce a pair of movie studio development projects; Carlyle zooms past the target for its ninth US real estate opportunity fund; and more in today's briefing, exclusively for our valued subscribers.

He said it

“Everyone has to be back to the office. I understand remote learning, I understand the trepidation, but the numbers are down, we know how to do it safely. We need private sector companies to say to their employees, ‘I need you back in the office.’”

New York governor Andrew Cuomo urging the state’s businesses to bring their workers back to offices by Labor Day (September 6).

What’s new?

Don’t call it a comeback…
Alan Yang and company have been here for years, at the forefront of the US e-commerce warehouse industry. Only now, instead of investing as part of GLP, they are doing so under their own shingle as GLP Capital Partners, or GCP, which just closed its debut fund on a record $2.3 billion. Yang [his LinkedIn here] and fellow GLP alumni Adam Berns [here], Steven Crowe [here], Daniel Ward [here] and Pete Kane [here] spun out from the Singaporean logistics specialist in 2019, following its $18.7 billion portfolio sale to Blackstone – the largest of its kind to date.

If the name of the California-based firm and its debut fund – GLP Capital Partners IV – have a familiar ring, that is by design, Yang tells PERE. GCP’s executives spearheaded GLP’s global expansion, including its three US funds and they wanted to acknowledge that track record. “We’re an independent firm focused on North American assets,” he said. “Our name, GCP, is short for GLP Capital Partners – a nod to our heritage with GLP.  We remain big fans of each other, and we’re pleased to have GLP as one of our LPs.” GLP accounts for less than 10 percent of the equity in GCP IV.

The GCP team took GLP’s remaining US assets with them after the Blackstone deal closed in late 2019 and used them to seed 20 percent of GCP IV. The fund, the largest to date to focus solely on North American logistics, is now 60 percent deployed, with more than 25 million square feet of assets in Southern California, Eastern Pennsylvania, Seattle, Portland and South Florida.

Lights, camera, construction
Blackstone is taking its foray into content production real estate to the next level: new development. After investing $800 million into Los Angeles-based Hudson Pacific Properties’ Sunset Studios portfolio last summer [see our coverage here], the New York mega manager is backing a pair of ground up developments for the platform. This week, the groups announced plans to build a 91-acre production studio 17 miles northeast of London for a total cost of roughly £700 million ($973 million; €819 million) [see the release here]. The project is also the first outside the US for Sunset Studios, which has hosted production for award-winning films such as When Harry Met Sally and La La Land. The platform is also expanding its Los Angeles County holdings via a planned 10-acre studio that is expected to cost between $170 million and $190 million and be completed in 2023.

A lean, mean fundraising machine
Acceleration is the go-to term for the impact of covid-19 on industry trends. It also describes what has taken place within The Carlyle Group, chief executive Kewsong Lee said during the firm’s second quarter earnings call last week [webcast here]. Acquisitions, exits and financings are coming together more quickly these days, he said. And so are funds. The Washington, DC asset manager launched its ninth US real estate opportunity fund in January and as of last quarter had already held a first close on about $7 billion, exceeding its target of $6 billion.

Lee expects Carlyle Realty Partners IX to reach a final close this fall, well ahead of the 18-month deadline the firm set for the raise. He attributes this to greater demand for capital, tech advancements and the firm’s decision to abandon less profitable business lines to focus on marquee platforms [see our reporting this here and here].

“As a result, our investment organization is operating and connecting more effectively than ever with an ability to pursue buyout, growth and core strategies utilizing a common platform,” Lee said.

Trending topics

Calling all diverse investors
Chicago-based real estate developer CRG has just launched US Logistics Fund II, with the aim of raising $300 million in the fund and up to $150 million through a co-investment vehicle. CRG’s more noteworthy fundraising goal, however, is to have 10 percent of USLF II’s investors be women or people of color – the first time the firm has set such a diversity target.

CRG president Shawn Clark explained the firm will target under-represented investors through the relationships it has developed with diverse business leaders from years of diversity initiatives.

Diverse investors have historically had limited access to quality investment opportunities, according to Ben Harris, senior vice-president of investor relations for CRG. A 2020 Millionacres survey revealed that seven of 10 Black investors felt that race affected their ability to access property investments and 65 percent of respondents said real estate investing is lacking or severely lacking in diversity.

Credit where it is due
Investors are clamoring for real estate credit strategies and that demand is bringing new managers to the space. Two firms, Toronto-based Slate Asset Management and New York-based Asia Capital Real Estate, both closed their debut credit funds last week. Slate closed Slate Real Estate Capital I on $600 million, securing commitments from global institutional investors as well as a preferred equity investment from Goldman Sachs Asset Management. The vehicle will issue bridge and transitional loans and acquire existing notes and debt securities.

Meanwhile, ACRE Credit I, which closed on $325 million of equity, will provide first mortgage bridge loans, mezzanine loans and preferred equity to rental housing owner-operators [our coverage of the fund here]. The demand for lending strategies is so strong that Chicago-based Heitman accelerated the launch of its second debt fund by at least six months, senior managing director Lewis Ingall told PERE last week [our coverage here].

Data snapshot

Coming together
2021 is shaping up to be a banner year for merger and acquisition transactions in the real estate industry.

Conversation starter

Are capital gains a deal driver?
During last year’s US elections, Democrats promised sweeping governmental changes [our coverage here] that had some in the real estate industry on edge. Those fears quickly dissipated once results trickled in [our coverage here] and have proven to be overblown, given the relative gridlock that has gripped Congress this year despite Democratic control of the House, Senate and White House. Yet, one concern seems to be lingering: that the capital gains tax rate will be hiked.

Worried about a bigger tax bill in subsequent years, property owners have quickened their sales plans, leading to an uptick in dealflow, Blackstone chief operating officer Jonathan Gray said during the firm’s second quarter earnings call. Similarly, the New York advisory Hodes Weill & Associates noted that fear of a higher capital gains rate has helped spur 2021’s record-setting merger and acquisition activity [our coverage here].

How is a potential change to capital gains taxation impacting your business? Are you speeding up your sales plans? Is it creating more buying opportunities? Let us know by dropping a note to

People move

Real estate’s new ACRE
Former CBRE Capital Advisors executives Phil Barker and Sam Khatib have launched a new real estate investment advisory firm, ACRE Solutions. Barker [his LinkedIn here] will be chief executive and managing partner, while Khatib [his LinkedIn here] will be senior director of ACRE, which stands for “alternative capital replacement.” The firm will specialize in providing liquidity options for limited partners in open-end and closed end funds; joint ventures; co-investments; as well as asset-level partial and minority interests. Barker was previously senior managing director in charge of the real estate secondaries vertical at CBRE Capital Advisors, the investment banking business of commercial real estate brokerage CBRE, while Khatib formerly was vice-president, focusing on both debt and equity capital raising and advisory work.

Investor watch

APG’s Kanters talks real estate debt
Patrick Kanters, global head of real estate and infrastructure at APG Asset Management, told PERE that the Dutch pension fund manager can allocate up to 5 percent of its portfolio into real estate debt, which it views as more “tactical” in nature. In an interview for members of the PERE Global Passport, he said the investor is actively looking at construction and development loans for housing schemes in markets like Europe and Australia where traditional lenders are more reluctant to finance property developments.

“The investments that we are targeting there are really to provide for equity-like returns, so it’s higher-yielding debt with an often lower-risk profile,” Kanters explained. APG began investing in real estate debt for more than seven years ago in Europe and the US before expanding into the strategy in Asia through a partnership with Australian lender MaxCap Group in 2019.

This week’s investor meetings
Tuesday, August 3

Wednesday, August 4

Thursday, August 5

Friday, August 6

Today’s letter was prepared by Kyle Campbell with Evelyn Lee
 and Christie Ou contributing