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Blueprint: Lone Star’s Polish office purchase, the Federal Reserve’s unexpected rate hike, Swiss Life’s data center recap

Lone Star makes office bet in Poland, what the Fed's rate rise means for stability, Swiss Life enters data centers via recap, and more in today's briefing, exclusively for our valued subscribers.

They said it

“There’s a middle ground that’s quite difficult where you don’t have the scale to be quite so generalist.”

Alex Price, CEO of Fiera Real Estate UK, on why the firm is now focusing on raising sector-specific funds. Read our coverage here.

What’s new?

Heading east: John Grayken’s Lone Star Funds is zigging where most of the market is zagging, picking up three newly built office assets in Poland.

Full steam ahead in Poland
While many investors have hit pause on investing in Eastern Europe due to the continued aggression of Russia in Ukraine, Dallas-based Lone Star Funds is not deterred. An affiliate of the manager has purchased three office properties in Poland from local developer Cavatina Holdings in a deal reported to be worth almost $150 million. The three class A office buildings – two in Krakow and one in Wroclaw – are collectively 90 percent leased, according to a release. The sale for Cavatina represents the second major portfolio sale to an institutional investor in the last couple of years. The developer sold three buildings in Krakow’s Equal Business Park to a joint venture managed by Warsaw-based manager Apollo-Rida.

Attention all database users!
PERE subscribers might have noticed that our database has a new look these days. That’s because we’ve given the database a major upgrade to make it easier to navigate and find the data you need.

New features and enhancements include:

  • Faster and more user-friendly interface, with auto-suggested search results and infinite scroll;
  • Pages designed specifically for service providers such as placement agents and investment consultants;
  • Law firm profiles;
  • Enhanced display of open-ended funds in both profiles and filter options.

If you haven’t already done so, check out our revamped database here. While you’re perusing, see if your profile data is up to date and, if not, let our research team know by emailing researchandanalytics@peimedia.com.

Desperately seeking stabilityThe commercial real estate debt market is looking for something elusive: stability. Last week’s surprise 75 basis point increase in the federal funds rate – 25bps higher than expected – has tamped down transaction activity. And the pain is not yet over, Chris Moore, a managing director at New Jersey-based advisory Chatham Financial, said. “Early in the year, there was an expectation that the Fed would be able to bring inflation under control quickly and wouldn’t have to take drastic actions,”  Moore told affiliate title Real Estate Capital USA in an interview last week. “The sentiment has changed to a realization and expectation that the Fed will have to take further significant actions to get inflation under control.”

Trending topics

PERE talks distress with Proskauer
The private real estate industry has been on the lookout for large-scale distress since the start of the pandemic. It still has yet to materialize, but Jeff Marwil at law firm Proskauer believes the situation may soon change. The US co-head of the firm’s business solutions, governance, restructuring & bankruptcy group anticipates the current macroeconomic environment – punctuated by high inflation and escalating interest rates – will lead to a significant uptick in troubled real estate deals. Marwil, along with fellow partners Steven Lichtenfeld and Vincent Indelicato, recently sat down with PERE editor Evelyn Lee for a video roundtable on distressed real estate at Proskauer’s headquarters in New York’s Times Square.  Watch a clip of the conversation here.

W.I.R.E.D into the Metaverse
One notable impact of the pandemic on the real estate market has been  widespread adoption of virtual property tours. Although such tours have typically involved live video, a new development backed by Paris-based BNP Paribas Real Estate could make the experience more immersive. Wearable Immersive Real Estate Dataroom (W.I.R.E.D), a digital twin project that uses data on millions of properties in Europe, can allow users to visualize past and future developments in cities throughout the region. The tool can also enable wearers to tour entire neighborhoods and virtually meet with other parties while “e-visiting” assets for sale or for rent, per a release.

CEOs take a stand on gun control
Following mass shootings in both Buffalo, New York, and Uvalde, Texas, in the last month, there has been a renewed push to enact legislative reform to address the “gun violence epidemic” in the US. Under the organization CEOs for Gun Safety, more than 525 American business leaders, including prominent real estate executives, have signed a letter urging Congress to pass “bold legislation” to address gun violence. Among the real estate signatories on the 2022 version of the letter: Bain CapitalBoston PropertiesMetaPropOaktree Capital ManagementPretium PartnersRXR Realty and Veritas Investments. A 2019 version of the letter was signed by 145 CEOs.

Data snapshot

Asian office: inflation beater
While offices have fallen out of favor with some investors in North America and Europe, the outlook for the sector is much rosier in Asia. According to M&G Investment’s Global Real Estate Outlook report, office stock being delivered has fallen to a new average low. The lack of supply combined with average lease terms of three years mean investors can quickly capture rent growth and provide returns above inflation more consistently.

People moves

AXA’s Aussie growth hire
AXA IM Alts is shaking up its Australian leadership as the region continues to attract attention from global investors. The alternatives investment arm of the Paris-headquartered insurance company has appointed Antoine Mesnage [his LinkedIn profile here] as head of Australia. He will replace Kumar Kalyanakumar, whom the organization credited with “repositioning the Australia platform as a leader in the alternative real estate market,” starting in October of this year. The investor has “sizable growth ambitions” in the Asia-Pacific region and has amassed almost €5 billion in assets under management since entering Australia in 2016. Mesnage previously served as head of transactions in his native France for AXA IM Alts.

Investor watch

Swiss Life’s bridge into data centers

Swiss Life Asset Management has picked a unique access point for data centers. The Zurich-based insurer has committed around $1.2 billion to DigitalBridge’s recapitalization of its data center portfolio company DataBank. Swiss Life, as part of a consortium that includes Paris-based investor EDF Invest, will take a 27 percent stake in the US-focused platform. The move is part of Swiss Life’s larger push into digital infrastructure and follows the formation of a joint venture to acquire a Spanish fiber company with AXA IM Alts in May.

This week’s investor meetings

Wednesday, June 22

Thursday, June 23

Friday, June 24


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