Blueprint: GIC’s real estate leadership changes, MSREI’s fund extension for G10, Brookfield’s first close for BSREP V

GIC’s real estate chief investment officer Lee Kok Sun retires after 27 years at the Singaporean sovereign wealth fund; Morgan Stanley Real Estate Investing receives a one-year extension on the investment period for its tenth global real estate fund; Brookfield raises $8 billion in the initial close for BSREP V; and more in today's briefing, exclusively for our valued subscribers.

-

They said it

“We believe the opportunity fund business is a seasonal business and now is the season” 

James Corl, head of the private real estate group at Cohen & Steers, tells PERE in an interview last week following the publication of its “Private real estate set up for attractive early cycle returns” whitepaper.

What’s new?

Lee Kok Sun, GIC

Sun sets sail at GIC

It is a case of bowing out at the top for Lee Kok Sun, chief investment officer for real estate at Singaporean sovereign wealth fund GIC. The state investor announced his retirement amid a number of senior personnel changes last week. A 27-year veteran at GIC, Lee oversaw the investor’s real estate business during a period in which it ascended to the top spot on PERE’s Global Investor 100 last year. Under his leadership, the investor stole a march on its institutional peers during a period of relative inactivity, topping the ranking with $69 billion of equity deployed in private real estate, according to PERE research. In a rare communication with PERE, he noted that during a time of uncertainty, GIC’s real estate team was “working hard to find opportunities that can generate stable returns over the long term.” He highlighted logistics, student accommodation and hospitality as particular areas of focus, describing them as “tailwind sectors” that survived the accelerated, secular challenges brought by the covid-19 pandemic. Now, with that crisis in the rearview mirror and with GIC leading the pack, he hands over the reins to Goh Chin Kiong, hitherto deputy chief investment officer for real estate, effective April 1.

Extending, but not pretending

Morgan Stanley Real Estate Investing has been granted a year-long extension for the investment period of its latest global fund, PERE reported this week. The fund’s investor advisory committee unanimously voted to extend the deployment period for North Haven Real Estate Fund X Global to the end of 2025, giving the manager more time to source investable opportunities for its diversified global opportunity fund. MSREI began investing the $3.1 billion fund in 2021. But in early 2022, market conditions began to change and inflation, interest rates and a wide bid-ask spread compounded to limit the fund’s options beyond Japan, where it remained active while pausing in North America and Europe until the back end of last year. Around half of the fund’s capital is still to be deployed.

With global deal volumes at a 12-year low, according to MSCI, it is unlikely that MSREI is alone in looking to extend the investment period. Indeed, one partner at a New York-based law firm told PERE this week he was seeing requests for extensions of both the investment period and the fund term as a result of the low level of transaction activity. Stay tuned for further analysis.

Brookfield stays bullish on fundraising

Brookfield Asset Management has raised $8 billion in the first close of its fifth flagship real estate opportunity fund, the firm said during its fourth-quarter earnings call last week. The Toronto-based manager’s senior leadership expected to hold a final close on Brookfield Strategic Real Estate Partners V before the year is out, citing strong traction among investors. “That’s very much in line with the previous funds as well in terms of their first close,” president Connor Teskey said on the call. “There is no doubt that there is a little bit of stress in certain portions of the real estate market – but while that stress, that temporary stress, is a reality for some, it’s also an opportunity for others.”

Meanwhile, Bloomberg reported last week that some investors are reticent to invest in the firm’s new real estate fund. Some two dozen fund managers, advisers, analysts and corporate executives attributed the fundraising challenges to some of the firm’s recent European office acquisitions and investors waiting for payouts on earlier funds.

Trending topics

More dynamic duos

The trend of large firms naming new global co-heads of real estate in recent months shows no signs of letting up. Notably, while some managers have appointed new executives to existing co-head structures, others that previously had a single global head of real estate have now split that role into two. These include Ares Management – which recently promoted Julie Solomon to global co-head of real estate alongside longtime existing real estate head Bill Benjamin. Now, BlackRock has elevated two of its senior real estate executives, Paul Tebbit and Thomas Mueller-Borja, to jointly lead its property platform. The move not only marks the first time the world’s largest asset manager has appointed co-heads of real estate, but also the first time it has a dedicated real estate head in place since Marcus Sperber left the firm in 2019. For more on BlackRock’s milestone appointments, check out our coverage here.

Break in the storm for private REITs?

In the first 11 months of 2023, investors in non-traded REITs redeemed around $17.4 billion, compared to $12 billion in all of 2022. Meanwhile, non-traded REITs raised only $9.8 billion through November last year, less than a third of the 2022 total figure of $33.2 billion. But redemption requests have now begun to trend down, which some attribute to improving retail investor sentiment, albeit at a slower pace than that of institutional investors. “There’s a lot of renewed interest from the institutional side of the market right now. Professional teams that have been investing in real estate through cycles understand the opportunity set,” Julia Butler, chief investment officer of KKR Real Estate Select Trust, told PERE. “It is more gradual, I would say, on the private wealth side.” Read our full analysis here.

Platform power

This past week, two sector-specialist investment platforms were unveiled in Europe. Madrid-based manager Azora launched the Quetta Data Centers platform in collaboration with technology investor Core Capital, through which it will invest more than €500 million of equity commitments to build a network of six edge data centers – which are located close to urban centers to reduce the load on hyperscalers – in Spain and Portugal. The platform’s data capacity will exceed 60 MW on completion, and construction has already begun on the first site in Madrid. The venture represents Azora’s first foray into data center investment.

Elsewhere, Partners Group and DeA Capital Real Estate have joined forces to invest in student accommodation assets across Europe. Partnering with Italian operator Camplus, the platform will supply more than 5,000 beds. The venture has been seeded by two developments in Paris and Barcelona. For Rome-based manager DeA Capital, this marks the expansion of its purpose-built student accommodation activity beyond Italy. For Partners Group, based in Zug, Switzerland, the venture represents its first PBSA platform in continental Europe, and reflects its increased focus on more operationally intensive assets – as global co-head of real estate Mike Bryant recently explained to PERE.

Data snapshot

Debt-averse investors

Although more than half of investors planned to invest more or the same amount of capital in real estate debt in 2024, the strategy also accounted for the second-largest percentage of investors that do not plan to invest this year. Thirty-one percent of investors planned to abstain from the strategy, a percentage that was exceeded only by listed real estate, which 52 percent expect to avoid, according to PERE’s FY 2023 Investor Report. Read the full report here.

People news

Another day, another new real estate head

Savills Investment Management is the latest manager to create a new head of real estate role. Hsueh Ling Ng has been appointed to head of APAC ex-Japan, the London-based firm announced. She will be taking on the newly created role to capitalize on the “compelling investment case” in the region, according to the release. Ng will work across all APAC markets aside from Japan, and will report to Alex Jeffrey, who has been the CEO since 2019. Beginning in April, the manager will replace retiring deputy chief executive and global chief investment officer Kiran Patel with two separate roles, the newly created role of managing director – equity investments UK and Europe, and a new global chief investment officer. Ng joins from Lendlease, where she was managing director and country head of Singapore for more than six years.

Investor watch

Bouwinvest adds to senior role creation

Amsterdam-based Bouwinvest Real Estate Investors is another organization that has created a new senior position – head of asset management – appointing Annemarie Maarse to the job, the company announced. The role is part of a larger restructuring that took place last year, according to the firm’s release. Previously, asset management at the investor was structured per fund, but in her new position Maarse will help transition Bouwinvest to a “centralized approach.” She will start in the role in June and has previously worked at Dutch property firms Achmea Real Estate and Altera Vastgoed. Bouwinvest hit a five-year divestment high in 2022, but expects this year will be more favorable for investment, Stephen Tross, the investor’s chief investment officer of international investments, told PERE in December.

This week’s investor meetings

Tuesday, February 13

Wednesday, February 14

Thursday, February 15

Friday, February 16

Today’s letter was prepared by Evelyn Lee, with Jonathan Brasse, Charlotte D’Souza and Miriam Hall contributing.