Blueprint: EQT’s record industrial fundraise, Hackman’s $1.6bn fund, Blackstone’s insurance partnership

Adverse market conditions do not prevent EQT Exeter from raising its largest fund; global production markets to see attention from Hackman's $1.6 billion latest studio fund; Blackstone and Resolution Life partner for scalable insurance capital; and more in today's briefing, exclusively for our valued subscribers.

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They said it

“What we’re looking to do is pick through the debris and find the companies and investments [with] broken balance sheets but not broken assets”

Barry Sternlicht, Starwood Capital Group‘s chairman and CEO, said on Bloomberg TV at the Robin Hood conference in New York last week how his firm plans to take advantage of the distress the market could see

What’s new?

Warding off concern: Ward Fitzgerald’s EQT Exeter has raised its largest ever fund

Big name, big fund
Despite murmurs of capital raising proving increasingly difficult in an uncertain market environment, EQT Exeter is the latest big name manager to beat its fundraising target. The Philadelphia-based manager closed on $3 billion for its latest fund targeting industrial properties, its largest ever fundraise, according to a spokesperson at the firm. EQT Exeter Industrial Core-Plus Fund IV raised capital from all major regions of the world, including North America, Europe, Asia and the Middle East, according to a release. EQT Exeter will target properties across the supply chain, from big-box warehouses to last-mile facilities.

The vehicle follows an oversubscribed fundraise from Ares Management last week, highlighting investors’ tendency to back brand names during periods of volatility. “We know in this tumultuous cycle of inflation, our clients’ beneficiaries – retirees, teachers, police, fire, and medical workers, and civil servants need increased performance of their pensions to pay bills and live without anxiety,” Ward Fitzgerald, head of EQT Exeter, said.

Medias touch
Hackman Capital Partners has raised $1.6 billion for its latest studio real estate fund. The Los Angeles-based manager closed on $1.4 billion of commitments in the main fund vehicle from a broad mix of global institutions, including sovereign wealth funds, public and corporate pensions and insurance companies, among others. Hackman raised an additional $200 million via co-investment commitments, according to an announcement.

The firm plans to invest in major global production markets, having already deployed around $488 million of the equity to properties in New York and Los Angeles. Hackman has deployed more than $8 billion into studio properties since it was founded in 1986 by Michael Hackman. It bought platform company MBS Group from The Carlyle Group in 2019, cementing its expertise, before more recently partnering with Square Mile Capital on a number of deals.

Big Resolution
Blackstone, already the biggest private real estate manager with $320 billion in assets under management, is set to substantially increase its AUM in the asset class through new insurance capital. Under a partnership with London-based life insurance company Resolution Life, Blackstone will initially manage up to $25 billion of Resolution Life’s existing private assets – which include those in real estate, private credit and asset-based-finance markets – in the first year.

Private assets managed by Blackstone are expected to increase to more than $60 billion over the next six years as Resolution Life makes new investments into asset classes managed by Blackstone. Additionally, Blackstone and Resolution Life plan to raise $3 billion of new equity capital, including a $500 million strategic investment from the New York-based manager.

Trending topics

Well-timed entry
Fiera Real Estate just launched its pan-European real estate business [check out our coverage here], but the impetus for starting the platform dates back two years, when the firm began receiving interest from existing investors to move into debt strategies in the region. The biggest challenge was finding the right people to lead the business, with the search ultimately leading to former Cheyne Capital executives Richard Howe and David Renshaw.

“I don’t think the timing could have been much better,” Charles Allen, head of Fiera Real Estate UK, told PERE. Indeed, with debt costs soaring in recent months, all-in interest rates have caused “a dislocation between the price that leveraged investors can pay and the price at which owners are willing to sell,” according to a new Oxford Economics report. The economic forecasting firm also predicted refinancing risk resulting from the change in the value of an asset over the prior financing period and the loan-to-value available at refinancing.

Sustainability weights in real estate
With many other factors pulling focus, real estate investors continue to incorporate ESG into their portfolios. Industry-led organization GRESB’s global real estate benchmark saw a 20 percent growth in adoption in 2022. Covering up to $6.9 trillion of general asset value globally, the benchmark recorded a 30 percent growth in Americas and 16 percent growth in Europe, respectively, according to an announcement.

While the average scores for both GRESB’s Standing Benchmark – the benchmark covering fully built properties – and the Development Benchmark increased, there were dips in performance improvement scores such as energy, GHG emissions, water and waste reductions due to the industry’s return to pre-pandemic operation level. Sebastien Roussotte, chief executive officer at GRESB, said he was proud to see “real estate industry deepen its commitment to ESG transparency and sustainability”.

Data snapshot

The harder they fall
Global investment volumes have dropped precipitously in the last couple of months as the market continues to be rocked by uncertainty. The September investment volume of $39 billion is the lowest monthly number recorded since 2018, and only the second month in that period with less than $100 billion invested, according to brokerage firm Colliers’ Global Capital Markets Insights Report.

People moves

A key North American recruit
StepStone Real Estate has hired its sole North America-focused business development professional, Yasmine Uzmez [her LinkedIn profile here]. Uzmez will be based in New York. She previously held senior roles at real estate private placement firms Park Madison Partners and Shelter Rock Capital Advisors.

Although the real estate arm of private markets investment firm StepStone Group advises many institutional clients in the US, the majority of investors in StepStone Real Estate’s discretionary funds and separate accounts are still based outside of North America, according to Jeff Giller [his LinkedIn here], head of StepStone Real Estate. “Yasmine’s hire represents an effort to expand our North America investor base,” Giller told PERE.

Uzmez replaces Alex Abrams [his LinkedIn here], who previously focused on North American real estate business development until he moved to the real estate arm’s investment team around 18 months ago. During that time, business development efforts were covered by StepStone Group’s generalist business development team and StepStone Real Estate senior team members.

Investor watch

Border to Coast to TownsendWhere do you go if you are a pension scheme looking to go from a standing start to a globally diversified private real estate portfolio in a short timeframe? Cleveland-based Townsend Group is the answer for Border to Coast Pensions Partnerships, one of the UK’s largest local government pension schemes. The adviser has been recruited as consultant for the buildout of its first global private real estate strategy. According to the pension scheme, both core and value-add strategies are expected to feature in the plan for Border to Coast, which should extend to approximately £5 billion ($5.7 billion; €5.79 billion) in fund positions. The pension scheme said environmental, social and governance considerations would be embedded into the process and that another proposition for UK real estate investments would follow. In the statement, Alistair Smith, head of real estate at Border to Coast, said: “The Townsend Group’s flexible approach will support us in building and managing a durable real estate strategy with quality investment managers that cover the spectrum of risk profiles, geographies and investment structures.”

This week’s investor meetings

Tuesday, October 18

Wednesday, October 19

Thursday, October 20

Friday, October 21

Today’s letter was prepared by Peter Benson with Jonathan Brasse, Evelyn Lee, and Christie Ou contributing