Blueprint: Brookfield’s fifth global fundraise begins; GLP’s corporate restructure means a reunion; Nuveen’s value-added European strategy

Brookfield's re-entering of the fundraising market demonstrates pace of deployment, GLP's corporate restructure sees a spun-out business return to the fold, Nuveen adds a closed-end fund to its open-ended quiver in Europe; and more in today's briefing, exclusively for our valued subscribers.

They said it

“Generalizing the concept of national security and politicizing economic, trade and investment issues violate the rules of market economy and international trade rules.”

Chinese foreign ministry spokesperson Mao Ning says the US is violating economic principles and trade rules by considering a ban on Chinese citizens buying property in the country, according to a report by Reuters.

What’s new?

Flatt out: Bruce Flatt says Brookfield Asset Management is back fundraising (Source: Brookfield Asset Management)

Market uncertainty, what market uncertainty?
The prevailing refrain PERE has received from market participants in the last six months has been volatility in the market is causing investment opportunities to dry up and fundraising to slow. Somehow, Toronto-based mega-manager Brookfield Asset Management did not get the memo. The Toronto-based firm only just closed its fourth global flagship real estate fund, Brookfield Real Estate Partners IV, in Q4 last year – its largest ever – but is already out fundraising for its fifth iteration, according to a letter to shareholders from chief executive Bruce Flatt. The firm will hold a first close “in the coming months,” he added.

The firm re-enters the fundraising arena so quickly because the prior fund is “materially invested or committed.” Supplemental information from the earnings call showed Fund IV had committed more than $14 billion of the $17 billion raised. No target was articulated for the new fund. However, Connor Teskey, president, told investors on an earnings call last week: “We have continued to scale our flagship funds and expect to continue to do so going forward.”

GLP reunited
The operations of US offshoot GLP Capital Partners have been reassumed by the logistics giant which let it spin out four years ago. The firm has merged with Singapore-headquartered logistics giant GLP, becoming its exclusive investment and asset manager, according to an announcement last week. As part of the reorganization, Alan Yang will be CEO of the now-reconnected outfit having served as CEO of GCP during its years away. The new structure “puts us in a position to grow GCP into one of the only truly global alternative asset managers with both a leading presence in Asia and a track record of scale and success in the US, Brazil and Europe,” he said. GCP spun out in 2019 after GLP’s $18.7 billion sale of logistics assets from three of its US funds to Blackstone – our coverage of that deal here.

Nuveen targets closed-end value in Europe
Nuveen Real Estate, the London-headquartered investment arm of the private pension fund, has launched a closed-ended European value-added fund. The firm has raised €180 million against a €300 million target, including a €50 million commitment from parent company TIAA and €75 million from Danish pension fund Sampension. The fund type represents something of a vehicle shift for Nuveen, which has most recently been investing in Europe via open-ended vehicles, including its second European Logistics Fund launched in 2022, and its European Cities Fund, which launched in 2016 and had €2 billion-worth of commitments. With the incoming capital, Nuveen will target urban logistics, housing and other alternative property types in response to anticipated repricing, according to an announcement. David Pearce, fund manager, said: “As such we have identified an opportunity to deliver new areas of potential value to our investors by sourcing assets that can meet the needs of an evolving world.”

Core-plus capital equals opportunity
Another firm positioning itself for the market dislocation in Europe is PGIM Real Estate. The Newark, New Jersey-based manager has added more than $400 million of capital in the last six months via its latest European core-plus fund. PGIM Real Estate will use the money to invest in logistics, multifamily, senior and student housing, new-generation office, hotels and self-storage, according to an announcement seen by PERE. The vehicle is being overseen by Jocelyn de Verdelon, senior portfolio manager and head of transactions in Europe. “In this high-inflation environment and amid market dislocations, investors increasingly want strategies that are able to distribute sustainable income and generate alpha,” de Verdelon said.

Coming to America
In a period of dislocation and macroeconomic headwinds, cross-border capital flows are, predictably, slowing. In the first half of last year, European capital headed to US real estate fell by 34 percent compared with the H1 average for 2017-21, according to a report by global brokerage and advisory firm CBRE. That makes a foray by European real estate manager Azora interesting. Through its subsidiary Azora Exan, the firm has acquired a portfolio of two prime office buildings in Cincinnati, Ohio, for $78 million,  according to an announcement. The 300,000-square-foot complex serves as the administrative arm of the Cincinnati Children’s Hospital. The deal in fact brings the firm’s investment to real estate stateside to approximately $450 million over the last year.

Trending topics

Valuations come into view via earnings
Earnings season is in full swing and is providing a view on valuation movements in a market clamoring for visibility on pricing. A couple of weeks ago, sector heavyweight Blackstone announced it had seen writedowns in the fourth quarter of 2 percent in its opportunistic portfolio and 1.5 percent in its core-plus holdings. This week, peers The Carlyle Group and Ares Management announced portfolio-wide negative performance too, posting negative 1 percent and negative 6 percent in Q4, respectively. No firm, however, fared worse than KKR, which registered a negative 8 percent performance in its opportunistic portfolio for the quarter. Despite the other managers mentioned all posting double digit returns for the full year, KKR’s returns dragged to just 3 percent for the same period. Most market participants predict further value declines to come in Q1. But, we hear, those managers taking heavier write-downs earlier are predicted to see less effect later. Read our full coverage on KKR’s earnings here.

China stands out in slowing Asia
According to CBRE’s 2023 Asia-Pacific Real Estate Market Outlook published last week, the pace of growth in the region will be slow, with inflation expected to ease and interest rates to stabilize in the back half of this year. For now, market participants will stay in wait-and-see mode until that time when investment volume is expected to “pick up significantly”, according to the report’s authors. As a consequence of these conditions, the broker predicted full-year investment volume in the region to be flat with a maximum decline up to 5 percent. Demand, when it does materialize in earnest, is most likely to come for offices, driven by China’s mainland recovery, followed by hotels and retail. Logistics, however, could see a retraction in activity as e-commerce growth normalizes.

Data snapshot

Second is the new first
Secondaries transaction activity continues to increase, setting another record in 2022, according to data from Ares Secondaries Group, the secondaries business of New York-based Ares Management. Read the full story analyzing the secondaries market here.

People moves

Putting people where its mouth is
London-based manager Valesco Group is putting pieces on the board to capitalize on a buying opportunity ahead, following up the hire of a chief financial officer with an investor relations and business development lead. Derek Williams [his LinkedIn here] who has 30 years of experience working for organizations including Swiss manager Edmond de Rothschild and London-based student housing firm Global Student Accommodation, has been added to help grow and diversify the firm’s institutional client base “as it looks to significantly increase assets under management”. The firm currently has around €2 billion in assets. His appointment follows that of CFO Ross McCaskill in January. “Derek is a seasoned, multidisciplinary real estate and private equity professional with a rare combination of ‘through the cycle’ investor and investment experience,” remarked Valesco’s chief executive officer Shiraz Jiwa in an announcement.

Investor watch

GreenPoint’s hard asset plans get consortium backing
New York-headquartered manager GreenPoint Partners sits proudly in 13th position in PERE’s second annual Proptech 20 ranking after raising $200 million for its Real Estate Innovation and Technology Venture fund. But the firm, led by former Macquarie Group global head of real estate Chris Green, has designs on managing hard assets too. Last week, GreenPoint Partners announced a second sizeable property investment alongside heavyweight institutional investors in a matter of a few months. GreenPoint has led the £305 million ($370 million; €345 million) acquisition of a UK-based car parks portfolio on behalf of investors including Ivanhoé Cambridge, the real estate business of Canadian state pension manager Caisse de dépôt et placement du Québec, Greater Manchester Pension Fund and US alternative investment firm GCM Grosvenor. The purchase of the 37 car parks, comprising some 15,000 spaces across major cities in the country, follows December’s investment in UK-focused logistics business Infinium Logistics, also alongside GCM Grosvenor.

This week’s investor meetings

Tuesday, February 14

Wednesday, February 15

Thursday, February 16

Friday, February 17

Today’s letter was prepared by Peter Benson with Jonathan Brasse, Charlotte D’Souza and Christie Ou contributing