He said it
“Post-financial crisis all you needed was the cash to buy assets and a rising market made everyone look like heroes. This time you are going to need to be much more selective and have the skill set to execute highly transitional assets strategies.”
Alex Price, chief executive of Fiera Capital’s UK real estate arm, told Bloomberg about the prospects for the upcoming market recovery.
For QuadReal, it is alternative real estate. For the Washington State Investment Board, it is industrial and multifamily it can build directly. For the Orange County Employees Retirement System it is diversified funds – but not just any diversified funds. The definition of core real estate is evolving and it now means different things to different investors. The old definition of prime offices and malls in gateway markets no longer applies. But what will replace it? We dug into that question for this month’s cover story. What we discovered was that as secular trends reshape the global economy, core managers need to be flexible in their approaches going forward and patient with their legacy holdings, which are in for a lengthy transition period.
BentallGreenOak has tested demand for European real estate debt – and found there is plenty of it. The US-headquartered company beat its €800 million target for GreenOak Europe Secured Lending Fund II with a final close on €869 million. Bullish on debt for non-core and value-add assets, it is understood to be targeting a 7 percent return. BGO’s global head of credit investing, Jim Blakemore, told sister title Real Estate Capital that fundraising was underway prior to the covid-19 pandemic, but the risk-return profile has not changed, as the firm anticipated a market reset. It just got more than it bargained for. “We didn’t know that would be a pandemic. But we told investors we wanted to be prudent because we were late into the cycle,” he explained.
International investors continue their push into Indian office business parks, despite the headline noise surrounding the property sector globally. The latest such move is by Ivanhoé Cambridge, the real estate investment manager of Canadian investor Caisse de dépôt et placement du Québec. The firm has partnered with the Indian real estate firm Embassy Group to launch an investment platform focused on acquiring and developing sustainable office business parks in key urban centers across the country, starting with Bangalore and Chennai. The JV will have a $500 million investment capacity, with Ivanhoé Cambridge and Embassy investing in a 80:20 ratio.
Later this week, PERE will publish its eagerly anticipated compensation report, in conjunction with real assets executive search firm Sousou Partners. “I’ve never seen this in the time we’ve covered compensation,” co-founder Ghada Sousou [her LinkedIn here] told us. What was she referring to? We do not want to give the game away just yet. But suffice to say, it relates to the paying of bonuses following a year impeded by covid restrictions. From 905 data points, the research reveals base pay and bonuses from 21 different seniority levels across both the private equity real estate and real estate investment manager universes. We speak to senior executives from both types of manager about Sousou’s major takeaway. Make sure you look out for the feature. In the meantime, you can read last year’s compensation report here.
Europe’s gateway office markets, hit hard by covid-19, look to have the sharpest recovery between 2021 and 2025.
The top opportunities in real estate secondaries continue to be led by managers. Last week, Brookfield recapitalized a $360 million portfolio of last-mile logistics assets owned by NorthBridge Partners, enabling the Boston-based manager to roll 21 assets from its NB Partners II fund into a continuation vehicle [original report from sister title Secondaries Investor here]. Last year, only $1 billion of the record $8.5 billion of secondaries activity were traditional, investor-led deals, according to secondaries specialist Landmark Partners. For more on the trends driving secondaries activity, see our analysis of BentallGreenOak’s acquisition of Metropolitan Real Estate [here].
Taking a gamble
Apollo Global Management has rolled the dice on The Venetian Resort, agreeing to acquire the operating company of the iconic Las Vegas property and the adjacent Sands Expo and Convention Center from Las Vegas Sands Corporation last week for $2.25 billion. Under the transaction, gaming real estate investment trust VICI Properties will also buy the land and real estate assets of The Venetian for $4 billion. According to a Green Street Advisors report, the Venetian transaction “is the first sizable deal announced since the pandemic began” and had a reported cap rate of 6.25 percent, which is on-par with pre-covid values, falling between the 5.75 percent cap rate for Blackstone’s purchase of Bellagio in late 2019 and the 6.35 percent rate for the acquisition of MGM Grand and Mandalay Bay (Blackstone again) in early 2020.
International Women’s Day
Honoring their colleague
Yesterday, we celebrated International Women’s Day. The Women In Real Estate [WIRE] network commemorated the occasion by announcing a different kind of fundraising milestone. WIRE Europe co-founder Audrey Klein [LinkedIn here] and fellow senior private real estate executives Matilda Williams [her LinkedIn here] and Laura Coleman of PineBridge Benson Elliot [her LinkedIn here], have established the Trish Barrigan Scholarship Fund to honor the late Benson Elliot managing partner who died last summer aged just 47 after an illness. The trio hoped to raise £100,000 of a targeted £180,000 by yesterday’s holiday. Thanks to generous donors, they in fact raised £110,000 for the scholarship at Boston College where Barrigan studied and starred as a soccer player. They are now looking to raising the final amount. Anyone wishing to further aid the cause should donate via this link.
GIC Private Limited, the Singaporean sovereign wealth fund, sees an opportunity in US retail. The investor is participating in a joint venture with three other groups to invest in net-leased, open-air shopping centers. Together, with listed open-air retail specialist RPT, private manager Monarch Alternative Capital and hedge fund Zimmer Partners, the partnership will wield $470 million of equity and target $1.2 billion of investments.
This week’s investor meetings
Tuesday, March 9
- Davie Police Officers’ Pension Plan
- San Bernardino County Employees’ Retirement Association (SBCERA)
- New Hampshire Retirement System
Wednesday, March 10
- Connecticut Retirement Plans and Trust Funds
- San Francisco Employees’ Retirement System
- Los Angeles County Employees’ Retirement Association
Thursday, March 11
- State Universities Retirement System of Illinois
- Nebraska Investment Council
- Texas County and District Retirement System
- New Mexico State Investment Council
- Tacoma Employees’ Retirement System
Friday, March 12
- Lancashire County Pension Fund
- San Joaquin County Employees’ Retirement Association
- Kent County Council Superannuation Fund
- Surrey County Pension Fund
- Jacksonville Police and Fire Pension Fund
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