Blueprint: GPIF’s LaSalle mandate, Morgan Stanley and Goldman Sachs’ staying power, Ares’ 10th US value-add fund closes

GPIF strikes fund of funds mandate with LaSalle; Morgan Stanley and Goldman have their comebacks chronicled by PERE; Ares closes its largest value-add fund ever; and more in today's briefing, exclusively for our valued subscribers.

They said it

“Growth is a much more impactful element to overall value than interest rates are”

Roy March, CEO of real estate investment bank Eastdil Secured, speaking to PERE about the downside of interest rate declines over the next two years. Read our interview here

What’s new?

Top mandate: Mark Gabbay’s LaSalle has landed a fund-of-funds mandate from GPIF.

Work in progress for Japan’s GPIF
Japan’s Government Pension Investment Fund continues to grow its real estate portfolio. The Tokyo-based investor has appointed LaSalle Investment Management to manage its third global real estate mandate, according to a statement. The mandate is structured as a fund of funds targeting core profile co-investments and joint ventures. The mandate is understood to be similar to a previous core mandate awarded to fellow Los Angeles-based manager CBRE Global Investment Partners in February 2021. Hideto Yamada, GPIF’s real estate head, said at PERE Tokyo last month that the investor would focus on investments generating consistent cashflow under the current economic slowdown. The value of GPIF’s real estate portfolio is $9.85 billion, according to the latest PERE GI 100 rankings.

The comeback kids
Investment banks Goldman Sachs and Morgan Stanley stood tall among the biggest private equity real estate firms prior to the global financial crisis. Although both suffered from senior turnover and poor performance in the aftermath of the crisis, the firms stayed the course and worked to restore their reputations and track records in the ensuing years. More than a decade after that crisis, Goldman and Morgan Stanley have rebooted their property platforms and regained their standing in the industry, with 2022 being a milestone year for both.

PERE’s November four-part cover story package – which includes MSREI new co-CEOs’ first joint interview – examines the evolution of both banks’ real estate businesses and what led the firms to persevere in the industry, even as many investment banking rivals fell away. Check out our deep dive here.

Opportunity awaits
Periods of dislocation can mean subtle changes in strategy and that is exactly what Ares Management is eyeing after closing its latest US value-add fund. Ares US Real Estate Fund X is more than 75 percent bigger than its predecessor, closing with $1.8 billion in commitments against a target of $1.5 billion. The new scale of the fund allows the firm to access larger deals, David Roth, partner and co-head of US real estate at the New York-based firm, told PERE in an exclusive interview.

Roth said the firm is also seeing more opportunities in structured investments, committing capital in multiple areas of the capital stack in a single deal. The hybrid investments allow the firm to somewhat protect itself from the volatility, while also catering to a need of the market as more traditional sources of liquidity retreat. Read our full coverage here.


On Friday, PERE summarized the private real estate market as bracing for a correction from the conversations with investors and managers at the EXPO Real conference in Munich last week. But what does ‘bracing’ look like? Here are five examples from our conversations at the event:

  1. Get on top of valuations: Stakeholders will need to be informed on decreasing values as soon and repeatedly as possible. AEW Europe boss Rob Wilkinson warned of “another six months of softening.” For him, “year-end valuation processes will be key.”
  2. Determine refinancing plans: Evidence of pre-emptive, early refinancings is emerging, with managers deciding locking in today’s rate is better than facing higher rates tomorrow. Higher risk-reward managers, meanwhile, are pondering buy-now and finance-later strategies. “What if you’re not still in the investment period by then?” asked Alex Lukesch, head of European investments at Madison International Realty. Answer: performance is risked.
  3. Focus on the ICRs: Lenders care less about loan-to-value ratios than income-cost ratios. “Banks’ main concern is income falling away,” comments Pictet Asset Management’s head of private equity real estate, Charles Baigler.
  4. Probe on a lot: “We shall stay in the market,” determined Paul Gibson, chief investment officer, EMEA direct real estate strategies, CBRE Investment Management. “Does that mean lots of transactions? Probably not.” With bid-ask spreads still meaningfully wide across a range of sectors and interest rates nowhere near settling, expect to find little to buy or sell.
  5. Close the capital you can: The denominator effect is real. “Equity and bond markets have fallen so, passively, allocations to real estate have gone up and, in some cases, it has gone above their target so they don’t have anything to invest,” warned Alex Jeffrey, chief executive officer at Savills Investment Management, on a panel. In such a capital marketplace, concentrating on investors that are miles from fulfilling allocations is making increasing sense.

Trending topics

Making a declaration
While periods of volatility usually make first-time fundraising difficult, Declaration Partners has announced itself raising $240 million for its inaugural fund. Anchored by the family office of David Rubenstein, The Carlyle Group’s co-founder and co-chairman, the New York-based firm is seeking to amass a portfolio of different property types. It has already deployed around half of the fund’s capital in a California industrial joint venture, multifamily across the East Coast and student housing in Pittsburgh. Rubenstein’s family office has invested alongside other family offices and high-net-worth investors.

The fundraise reflects the appetite for real estate among more nimble investors – even in the current environment. “Many families and individual investors seek an alternative to larger institutional asset managers by investing with like-minded partners,” co-founder and head of real estate Todd Rich said in an announcement.

Continued spark
Only a couple of weeks after Starwood Capital Group’s infrastructure arm launched a platform focused on clean energy development, the manager has doubled down on its green focus. The Miami Beach-headquartered firm has partnered with EnviroSpark, an Atlanta-based electric vehicle charging company, to provide EV charging stations to Starwood’s nationwide portfolio of multifamily assets. The “multi-million dollar” deal will see 400 charging stations implemented at more than 80 properties, according to a statement. Starwood Energy’s recently formed platform, Radial Power, will manage the project on behalf of Starwood Capital.

While many managers have been focused on EV charging, multifamily properties are typically considered behind industrial, offices and retail, where scale and demand have made more sense for institutional owners, according to PERE reporting for an upcoming story. Multifamily will be part of the charging infrastructure, and one of the market’s major players is laying down the proverbial cable early.

Data snapshot

Default risks
As a recession looms, many are searching for impacts on real estate markets. Research firm MSCI found some European funds in its Pan-European Quarterly Property Fund Index are more at risk with their top tenants.

People moves

Wellcome to the new age
London-based Wellcome Trust, a foundation focused on funding research on a broad range of topics including climate change, infectious diseases and mental health, is undergoing a change in leadership on the investment side. First announced in June, Wellcome’s chief executive officer of its investment division Peter Pereira Gray [his LinkedIn here] planned to step into an Emeritus Partner role.

This past week he made that the move official via a LinkedIn post, mentioning that he will be the chair of the foundation’s valuation committee and remain connected to the investor’s £38.2 billion ($36.2 billion; €37.3 billion) portfolio. Nick Moakes remains in his role as chief investment officer, with no successor to Pereira Gray announced.

Investor watch

Deepening the bond
Singapore’s GIC further strengthened its tie with industrial heavyweight ESR in Australia by signing up for two of the firm’s vehicles within a month. Last week, the investor committed A$490 million ($309 million; €318 million) to the firm’s $1 billion develop-to-core logistics fund ESR Australia Development Partnership II. Having reached a combined anchor close of A$540 million, EADP II is expected to reach a second close in the first half of 2023.

The fund’s A$1 billion predecessor EADP I was also backed by GIC and other investors in 2020. Apart from develop-to-core, GIC also invests with ESR across different return strategies in Australia. The investor’s latest commitment in EADP II came shortly after it injected A$600 million into the ESR’s core-plus vehicle ESR Australia Logistics Partnership III last month.

This week’s investor meetings

Tuesday, October 11

Wednesday, October 12

Thursday, October 13

Friday, October 14

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