They said it
“Office mandates are never going to work.”
Marc Benioff, Salesforce co-founder and co-CEO, at a company event in New York on June 23.
What’s new?
Crown restoration: Heady says working with regulators will be a key part of Blackstone’s recovery plan for the casino operator
A Crowning moment for Blackstone
Blackstone has closed its controversial acquisition of the troubled Australian gaming and entertainment group Crown Resorts, 15 months after making an initial offer to buy the company. The private equity real estate giant is understood to have paid $6.3 billion for the casino operator in Blackstone’s biggest transaction in Asia-Pacific to date. The deal comprises three premium resort and casino properties in Melbourne, Perth and Sydney, according to a release. Blackstone first acquired a 10 percent stake in Crown in 2020, despite the latter company being embroiled in a money laundering scandal. In an exclusive interview, Chris Heady, Blackstone’s chairman of Asia-Pacific and the head of real estate Asia, told PERE that the firm will be focused on turning around the gaming company and is “fully committed to working with regulators to ensure that we operate Crown with the highest levels of ethics and integrity.” Read our coverage here.
GIC’s student housing spree continues
GIC Private Limited has bought into yet another European student housing company. Just a month ago, the Singaporean sovereign wealth fund and Charleston, South Carolina-based residential manager Greystar formed a joint venture to buy Student Roost, the third-largest UK student housing provider, from Brookfield for £3.3 billion ($4.2 billion; €3.9 billion). Now GIC has joined as a new investor in The Student Hotel, an Amsterdam-based hospitality company with a business model that is a hybrid between student accommodation and hotel. Under the transaction, which values TSH at €2.1 billion, Dutch pension fund manager APG Asset Management and GIC will acquire a substantial stake in the hospitality company and commit to invest in further expansion of the platform. Aside from APG, which first invested in TSH in 2015, other investors in the company include founder Charlie MacGregor and London-based manager Aermont Capital.
Aware Super takes real estate in-house
Aware Super, Australia’s third-largest superannuation fund, has launched its own real estate platform, led by former ISPT and Australia Post executive Michelle McNally, according to a report from the Australian Financial Review. The new Australia-focused platform already owns and manages $1.5 billion in industrial, office and residential assets across the country. The investor is establishing Aware Real Estate with Sydney-based manager Altis Property Partners, which has invested with the superannuation fund for more than a decade, including the acquisition of an affordable housing development in Melbourne last year. Among other holdings in Aware Real Estate’s portfolio is a 49.9 percent interest in the Lendlease Retirement Living Trust, one of Australia’s largest owners, operators and developers of retirement villages, with 75 properties housing approximately 17,000 residents.
Trending topics
From work to home
Office-to-residential conversions have been a hot topic since the work-from-home revolution began at the onset of the pandemic. New York-based developers Silverstein Properties and Metro Loft are now undertaking one of the biggest such conversions to be launched during covid. The partners have agreed to buy 55 Broad Street, a 1960s-vintage office building that currently sits about one-third empty, and plan to convert it into a 571-unit apartment building. This is “the right evolution of these struggling, underperforming, older office assets that are approaching their obsolescence,” said Nathan Berman, Metro Loft founder and managing principal, told The Wall Street Journal last week. While such conversions are limited by the city’s zoning restrictions, a successful outcome for the 55 Broad Street redevelopment could make it easier for other real estate firms seeking to do similar projects.
More PERE firms link to the blockchain
It is becoming increasingly common for private real estate groups to adopt blockchain technology in their businesses. The latest to do so are Miami-based Infinity Investment Group and A9 Family Office. The partnership is targeting $250 million for its Infinity Multifamily Real Estate Fund I to invest in residential assets in the top 20 US markets. The unique part of the strategy is that the firms are looking to tokenize properties to help with exiting investments, according to a release. Capital will be deployed into development projects, which will then be sold via “asset by asset IPOs.” The new fund’s tokenized exit strategy follows Jamestown Properties’ announcement this year that it would accept rental payments in cryptocurrency. The innovation train is picking up speed.
Backing the Future
Augsburg, Germany-headquartered real assets manager Patrizia has stepped into the proptech fundraising game. The firm held a €50 million first close of its debut venture capital fund, Sustainable Future Ventures, raising half of its target. With the new vehicle, Patrizia is looking to invest specifically in technology platforms that reduce carbon emissions. “Reducing our carbon footprint in construction and real estate is the biggest challenge of our time, so funding the companies who are at the cutting edge of sustainable innovation is absolutely essential,” founder and chief executive officer Wolfgang Egger said in a statement. The fund will target investments in seed to Series B technology companies globally, with a strong focus on Europe. Sustainable Future Ventures’ investments to date have included Gbuilder and Liftango, software companies based in Finland and Australia, respectively.
Data snapshot
Retail rebound
While retail continues to struggle in Asia-Pacific and Europe, the sector is looking noticeably healthier in the US, according to Nuveen’s most recent quarterly outlook report. Indeed, vacancy rates in more than three-quarters of US cities are below historical norms, which suggests retail in the country is stronger than what many people assume.
People moves
Bailey takes over at Belay
Los-Angeles based real estate investment firm Belay Investment Group is a majority women-owned business, but, until recently, the firm’s top executive was a man. That will now change as Eliza Bailey [her LinkedIn profile here], one of the firm’s founding partners, has been appointed chief executive and chief investment officer. Her predecessor Barry Chase [his LinkedIn here] is stepping down as CEO and will become executive chairman. Bailey previously carried out the duties of chief investment officer but did not have a formal title. Belay is best known for running a real estate emerging managers program for the California State Teachers’ Retirement System, which in March allocated an additional $350 million of capital to Belay, bringing the pension’s overall commitment to the firm to $900 million.
Investor watch
PGGM makes innovation push
Joining the wave of investors backing life science and innovation projects in Asia, Dutch pension fund manager PGGM has partnered with Australian real estate group Lendlease to tap into the sector. The S$1 billion ($720 million; €680 million) Lendlease Innovation Limited Partnership will invest in real estate assets in the innovation and life science space with a focus on Australia, Japan and Singapore. PGGM will hold an 85 percent interest in the partnership, while Lendlease will own 15 percent, according to a release. The joint venture has been seeded by a 12-story commercial asset in Yokohama, Japan. In a joint statement, Jikke de Wit, PGGM’s senior director of Asia-Pacific private real estate, and Ping Ip, associate director of Asia-Pacific private real estate, noted the focus on life sciences is supported by PGGM’s client PFZW, which manages a pension scheme for the Dutch healthcare sector with three million members.
This week’s investor meetings
Tuesday, June 28
Wednesday, June 29
Thursday, June 30
Today’s letter was prepared by Evelyn Lee, with Peter Benson, Christie Ou and Jessica Nangle contributing
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