Blueprint: Brookfield fundraises in Europe, Blackstone dives into self-storage, Oak Street prepares net lease security

Brookfield dives into the competitive open-end European fund market; Blackstone bets big on self-storage; Oak Street looks to securitize net lease notes; Savills puts Japan in the crosshairs; and more in today's briefing, exclusively for our valued subscribers.

He said it

“We’ve seen modest gains in some property types, we’ve seen modest reductions. However, we really haven’t seen the market return to a normal level of transactions and we believe there may be further write downs ahead.”

AndCo consultant Peter Brown on the Teachers’ Retirement System of Oklahoma’s decision to scrap a $200m commitment to a new open-end real estate fund manager.

What’s new?

Open-ended competition
Brookfield just completed the initial round of fundraising for its European core-plus real estate fund, Brookfield European Real Estate Partnership. But how does it measure up to rival vehicles? At $1.3 billion, the equity haul puts BEREP as the 11th largest open-ended real estate fund and the third largest open-ended core-plus fund targeting the region, according to PERE data. BEREP is also the second largest of six 2019-vintage open-ended core-plus European real estate funds, after AXA IM – Real Assets’ $1.8 billion AXA Logistics Europe Fund. However, BEREP is dwarfed in size by the Big Kahuna of European open-ended funds, Blackstone Property Partners Europe, which at $8.3 billion is more than six times larger.

Seeking security
Sale and leasebacks have taken an outsized role in the US real estate market, accounting for a record 20 percent of investment activity last quarter, according to CBRE. The relative safety and steady cashflow of these arrangements have also made them popular among investors. Net lease specialist Oak Street Real Estate Capital is looking to capitalize on this increased popularity in a new way. The Chicago-based manager hopes to securitize a $2.1 billion pool of triple net lease mortgage notes. The firm hopes to close the offering, which is collateralized by 247 investment-grade loans, by this Friday.

Big in Japan
Savills Investment Management is taking a focused approach to its debut Asia open-end core fund. Rather than chase a pan-regional, diversified mandate, the manager will zero in on Japanese apartments. It raised $200 million in the first close for Japan Residential Fund II, which will be seeded with a portfolio of Greater Tokyo residential assets while subsequent acquisitions will also focus on sectors driven by urbanization and demographic trends. Japan has been an important market for the firm in the region, having originated, invested and transacted over $6 billion since 2014.

Data snapshot

Feeling flexible
Last month, 36 percent of APAC tenants had an increased desire for flexible office space, up from 29 percent in August, a recent CBRE survey shows.

Trending topic

Beds and sheds
One way to characterize the portfolio of Blackstone’s income-focused Blackstone Real Estate Income Trust is real estate where you will find many people during the current covid-19 pandemic and real estate where you will not. On the one hand you have multifamily and on the other you have logistics; together they make up 90 percent of its AUM. Now, self-storage can be added to the second category after the New York powerhouse purchased US-based Simply Self Storage from rival Brookfield for $1.2 billion [see the announcement here]. They are not alone in that regard. Days before, London-based Moorfield laid down a strategic marker in the sector teaming up with South African REIT Stor-Age for a £50 million ($65 million; €55 million) to £100 million development joint venture [see announcement here].

Arise debt firms
It is customary for the categories in our prestigious annual awards to evolve and 2020’s Global PERE Awards are no exception. This time, there are three newcomers in the form of regional Debt Firm of the Year awards in recognition of the increasing relevance of those managers raising equity for the purpose of issuing credit to real estate borrowers. To be clear, we are not talking about an award for managers that would buy credit positions – this we consider to be private equity real estate investing – but those managing debt funds with a view to offering investors a chance to engage in more defensive investments via lending channels. So, if you think your firm qualifies for one of these awards, please submit to us highlights of your activities using our dedicated submission form. Access the submission form here.

People move

Clients first
Bouwinvest Real Estate Investors has appointed Mark Siezen as its first chief client officer. The Dutch institutional manager with €12.9 million in assets under management has created this position to better serve its investors’ interests on Bouwinvest’s board. Siezen, who was previously executive director in property services firm CBRE’s Netherlands office, will perform various investor relations functions in addition to sitting on Bouwinvest’s board alongside four other senior executives.

Investor watch

This week’s investor meetings

Tuesday, October 27

Wednesday, October 28

Thursday, October 29

Friday, October 30

Today’s letter was prepared by Kyle Campbell with Jonathan BrasseEvelyn Lee and Arshiya Khullar contributing

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