He said it
“Real estate isn’t Wayfair and isn’t Peloton. We (were) hit with a bazooka. Worldwide, real estate hit a wall.”
Lights, camera, branded
Bain Capital Real Estate has taken private real estate’s newfound infatuation with content creation to the next level by launching a platform to own and operate studio space. Last week, the Boston-based manager rolled out its plans for the first studio under the Echelon brand, a $450 million development in Hollywood. The five-acre property is the fruit of a two-year-old partnership between Bain and Bardas Investment Group, a Los Angeles-based real estate investor. Until now, the joint venture had focused on creative office space.
Bain is not the first manager to delve into production space. The booming demand for content to fill streaming services has sparked a studio buying spree [see our coverage here]. But by creating a branded platform for its full-service office and studio offerings, Bain is setting the table for a traditional private equity rollup that could be spun out into a standalone company. That would be a breakthrough for an industry historically lacking in institutional-grade third-party real estate providers.
Canada’s Public Sector Pension is the latest Canadian pension investor to make a play in international logistics. The $170 billion investor has launched a £1 billion (€1.2 billion; $1.4 billion) joint venture with Chicago-based sector specialist Bridge Industrial to target last-mile facilities in Greater London and the UK’s Midlands region. PSP’s commitment follow’s Ivanhoé Cambridge’s partnership with Hong Kong-based manager PAG to invest in Japanese logistics; CPP Investments‘ Indonesian JV with Australian manager LOGOS; and QuadReal’s $1 billion Chinese logistics platform with New York’s Warburg-Pincus, all of which have launched since the beginning of the year.
Allianz Real Estate hit the latest milestone in its debt platform with its first single-asset loan transaction in the European private rental sector. The property arm of Munich-based insurer Allianz – which won its first third-party client via its debt fund last year – has issued £140 million ($198 million; €161 million) in financing to Canary Wharf Group for 10 George Street, a 224,039-square-foot residential and retail property in London’s Canary Wharf area. The 10-year fixed-rate mortgage is also considered a green loan since it is collateralized by an asset rated ‘Excellent’ under the BREEAM sustainability assessment method and is fully compliant with the CRREM carbon reduction pathway for residential buildings.
Six of the top 10 US cities targeted by international institutions were secondary markets, according to AFIRE’s annual investor survey.
A value creation toolkit
Many managers are busy rethinking how to keep properties resilient, future-ready and attractive to an ever-younger demographic that expects more than just floor space from homes, offices and shops. And it seems active management is the required modus operandi to enhance value and deliver returns to investors. PERE’s special report on Value Creation highlights five things managers can do now to do just that:
- Reposition the physical space – would retail work better as homes?
- Think of space as a service – consider adding amenities or introducing flexible lease structures.
- Know your tenant – get closer to tenants, understand their needs and how they are using space.
- Embrace data analytics – to understand how assets are performing and which locations are most likely to attract tenants and higher rents.
- Think ESG – “If you do not [you] are at risk of running into a gating issue, where potential buyers and tenants just cross your asset off their list,” says Partners Group’s Jessica Wischer.
Easier said than done
Getting employees to return to the office after a year and a half of remote work is proving to be easier said than done, even for one of the biggest companies on the planet. Last week Google’s parent company, Alphabet, backtracked on its plan to require at least three days of in-office work per week when offices re-open in September, buckling to employee opposition. Instead, it will bring in 60 percent of its workers thrice weekly while 20 percent work from home permanently and the other 20 percent relocate to other Google offices. It remains to be seen how this plan sits with rank-and-file Googlers. Other office occupiers – and their landlords – should take note of the outcome.
PERE’s first fully-digital, all-week conference is up and running. The ‘chase the sun’ PERE Global Summit Virtual Experience [visit the event’s dedicated website here] connects private real estate’s most influential community of institutional investors, managers, advisors and other strategic partners. Substantial networking opportunities accompany a comprehensive conference agenda.
Here are five sessions not to miss:
- Straight out of the gate, Day One kicks off with a panel of heavy-hitting investors setting the agenda. Netherland’s APG Asset Management, Canada’s QuadReal Property Group and Australia’s AWARE Super. PERE editor Evelyn Lee [her LinkedIn here] will moderate.
- Day One also includes a fireside chat between Sylvain Fortier [his LinkedIn here], chief investment and innovation officer of one of the sector’s most influential investors, Ivanhoé Cambridge, and PEI’s Real Estate Group senior editor Jonathan Brasse [his LinkedIn here].
- On Day Two, Evelyn takes the wheel again for a panel mapping recovery scenarios across Europe, including speakers from Canada’s CPP Investments and the UK’s M&G Real Estate and Aberdeen Standard Investments.
- Day Two also contains a session depicting the ‘new normal’ in the US. Lazard’s Adam Handwerker [his LinkedIn here] helms a session including big league managers CBRE Global Investors, Ares Management and Harrison Street.
- Fancy something a little more intimate? Day Three is full of focused, highly curated, personalized meetings focused on North America, Europe and Asia. These are small, informal, interactive group sessions enabling for greater connections.
Wall Street to Fifth Wall
Jeremy Fox [his LinkedIn here], former co-head of real estate, gaming & lodging investment banking at Credit Suisse, has joined proptech giant Fifth Wall as partner. After more than 20 years on Wall Street, the finance veteran will lead corporate partnerships and oversee Fifth Wall’s capital markets business. Before Credit Suisse, Fox was the head of US equity capital markets at Deutsche Bank. Speaking about his reason for joining Fifth Wall, Fox noted in a blog post that he believes “technological transformation is happening fast” and it is critical to help real estate firms to understand the opportunities presented by this new trend.
The Teachers Retirement System of Texas committed $150 million to alternatives specialist Harrison Street’s eighth flagship fund last month. The Chicago-based manager specializes in demographic-driven assets, including student and senior housing. The pension investor also committed $50 million to a UK residential vehicle managed by Dallas-based Banner Oak Capital and $40 million to USAA’s USEF Whisper Pooling fund, a core vehicle focused on the US.
This week’s investor meetings
Tuesday, May 11
Wednesday, May 12
Thursday, May 13
Friday, May 14