Blueprint: GLP’s $10bn H1 fundraising haul, Hines’ European data center debut, NYS Common’s $1.5bn ODCE commitments

GLP sits atop H1 fundraising table, Hines enters data center market via Italy, New York Common writes big checks to three ODCE funds, and more in today's briefing, exclusively for our valued subscribers.

They said it

“I can honestly say that I could not have called this outcome – that raising capital via Zoom would be as successful as it was.”

Tammy Jones, founder and chief executive of Basis Investment Group, on the largely virtual capital raise for BIG Fund II, which raised more than double the capital of its predecessor. Read the full interview here.

What’s new?

Industrious fundraising: Ming Mei’s GLP proves investors’ appetite for industrial hasn’t slowed. The Singapore-based specialist was private real estate’s biggest fundraiser in H1 2022.

GLP leads H1 2022 fundraising
PERE’s latest fundraising report shows that industrial continues to be the top pick for investors, with logistics heavyweight GLP leading the way with the largest combined real estate fund closes in the first half of the year. Garnering more than $10 billion in total, the Singapore-based manager raised three of the 10 largest private real estate-focused funds closed in H1 2022. GLP China Income Partners VGLP Japan Development Partners IV and GLP China Logistics Fund III are also the only sector-specific and non-debt funds among the top 10. The industrial sector also overtook multifamily to become the most popular strategy for sector-specific funds, raising a total of $13.6 billion during the period. 

To Italy with Hines
[v]Hines has made its European data center debut with the acquisition of a land site in the Milan metro area in partnership with Dallas-based Compass Datacenters. The two Texas-based firms plan to build one of the largest data center campuses in Italy, with 2.3 million square feet of space that would support more than 48 megawatts of IT load. Construction is set to begin in 2023. “This first investment into the Italian and European data center market establishes a new area of development for Hines, representing significant opportunities in a high-growth sector,” Mario Abbadessa, Hines’ head of Italy, said in a statement. The Italian data center market is becoming an increasingly popular destination for hyperscalers, with $2.6 billion projected to be invested by 2026, he said.

Trending topics

Corrective pricing
DWS believes the European commercial real estate market has started a period of price correction, citing the impact of rising yields on prime values. The report, published last week by the Frankfurt-based manager, outlined a future in which prime values could drop by 10 percent to 15 percent over the next year, with a commensurate impact on total returns. DWS does see some sector-specific bright spots, specifically several residential strategies – including affordable housing, student housing and co-living – as well as urban and niche logistics.

The report also highlighted potential opportunities in this repricing environment: “In time, as price corrections are realized, office refurbishment and possibly retail positioning should gain in attraction.”

A different kind of office space
The next step in hybrid working? Working in the Metaverse. Research from Regus, a flexible office provider, has found that two-thirds of business leaders in the UK view the Metaverse as the natural progression for hybrid work, while a little under half, 48 percent, have already begun investing in space in the online world. Metaverse working involves employees in different locations interacting through 3D avatars, with 70 percent of bosses expecting it will increase demand for flexible working. Companies dedicated to providing real estate in the Metaverse have started popping up, but any meaningful uptake is likely to be slow, with most office workers believing their companies are likely to wait until other employers invest in the technology first.

Data snapshot

Office investment falls off
Despite a rebound to more normal levels last year, global brokerage firm Savills has found office investment volumes in 2022 are on pace to fall short of 2021 activity. Transaction volumes in the second quarter this year reached just $70 billion, the fourth lowest quarterly number since 2015. Savills attributed the drop in activity to the uncertainty in the broader market.

People moves

BlackRock recruits Japan real estate head
BlackRock has hired a former Blackstone executive to lead its Japanese real estate investment activities as the firm plans to strengthen its real estate presence in the country. Daigo Hirai [his LinkedIn profile here] has been named head of Japan real estate to oversee the New York-based asset manager’s operations and deal sourcing in Japan. Prior to joining BlackRock, the industry veteran spent 12 years at Blackstone, where he was most recently a managing director for real estate, based in Tokyo. Hamish MacDonald, BlackRock’s head of investments for APAC Real Estate, said Japan is a “key market” for the firm, which is currently pursuing several strategies in the country where it can “drive rental growth as well as asset values.”

Investor watch

Not so Common commitments
Pre-pandemic, the NCREIF ODCE index of open-end core funds faced headwinds with its heavy focus on traditional property types, particularly the challenged retail sector. However, the index has followed up a record performance in 2021 with even better results for the first half of 2022, posting a 28.31 percent net IRR for the 12-month period ending June 30. Such strong performance has led one investor to back three of the longer-tenured ODCE funds. New York State Common Retirement Fund, based in Albany, New York, committed $500 million each to JP Morgan Asset Management’s Strategic Property Fund, Principal’s US Property Separate Account and PGIM’s PRISA fund. The $1.5 billion in total commitments represent the investor’s first outlays to ODCE funds since March 2021, when the investor made a $300 million commitment to LaSalle Investment Management’s US Property Fund.

This week’s investor meetings

Tuesday, August 9

Wednesday, August 10

Thursday, August 11

Friday, August 12

Today’s letter was prepared by Peter Benson, with Evelyn LeeSamantha Rowan and Christie Ou contributing.