Blueprint: PERE’s Asia conference kicks off, Blackstone and Brookfield’s loan woes, Tristan’s third stake sale

What to watch for as PERE Asia gets underway; Blackstone and Brookfield engage with loan issues as defaults loom; Tristan's sale to Candriam now at 80 percent but founder Lewis insists management stays in control; and more in today's briefing, exclusively for our valued subscribers.

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They said it

“Maybe 20 percent of buildings are going to be competitively obsolete”

Scott Rechler, CEO of RXR Realty, sees his firm’s own portfolio as an allegory for the wider market on CNBC’s Squawk on the Street.

What’s new?

PERE's Asian conference in Singapore

Onward and upward Singapore
The 16th annual PERE Asia Summit kicked off today at the Fairmont Hotel in Singapore. Over the next three days, approximately 600 delegates will hear from the industry’s largest managers and investors – including Blackstone, KKR, Ivanhoé Cambridge and Oxford Properties – on the most pertinent issues of the day. The Responsible Real Estate Forum will be held on day one and will be devoted entirely to ESG-related issues, while the Global Investor Forum will span the second and third days of the event. Look out for PERE editor Evelyn Lee and senior reporter Christie Ou, who will both be in attendance and performing on-stage duties during the event.

Here are some of the conference highlights to look out for (and check out the full agenda here):

  • Keynote panel: Mapping the next decade of real estate investing.
  • Keynote panel: Top Guns of Asia-Pacific – why Asia, why now?
  • Investor panel: Global institutional investors discuss allocating capital during inflation, recession, and rising interest rates.
  • Investor panel: Asia-Pacific investors’ appetite for global real estate.

Credit pinch
Last week served up a timely reminder that not even private real estate’s two powerhouses, New York-based Blackstone and Toronto-based Brookfield, are immune from the effects of a market dislocation. Brookfield defaulted on two loans worth $784 million against two Los Angeles office properties, while Blackstone was denied an extension on an approximately securitized €200 million loan on a portfolio of Finnish office properties it acquired via its take private of Sponda in 2018 and had a $270 million loan on a portfolio of Manhattan multifamily properties go into special servicing.

Both firms were quick to play defense, pointing to macroeconomic turmoil, as they figure out solutions to their obligations. How situations like these play out will ripple roughout the market and peers will be watching carefully, as PERE noted in last week’s Friday Letter.

Tristan’s Lewis is staying put
When Tristan Capital Partners announced last week it had executed a third stake sale to New York Life-owned manager Candriam, bringing the latter’s holding up to 80 percent, there was an element of the inevitable about the update. Candriam, after all, is accustomed to controlling large majority stakes across its network of managers. But where there is a buyer’s story, there is also a seller’s story. As PERE revealed today, the seller’s story is about the meaningful reduction in position of the firm’s high profile founder Ric Lewis. But while he has significantly divested from his ownership of the business, he insisted his day job does not change. He told PERE: “Some clients have asked has this changed my motivation? I said, ‘You should pull up a chair next to me. Be at my desk. Nothing is going to change. I’m still doing the job I do. You’ll see me all the time. There’s still way too much to play for.’” Read PERE’s interview with Lewis following the announcement here.

Trending topics

The river runs green
After jumping two spots in PERE’s Proptech 20 ranking last year, Washington, DC-based Camber Creek continues to attract capital for its real estate technology strategy. The fourth-ranked firm has garnered more than $100 million for its latest fund, Opportunity Fund I. The follow-on series maintains its core venture fund series and the plans for the capital differ to straight venture capital investment in proptech startups. Camber Creek wants the capital to be more creative, using it to reinvest in companies the firm has already invested in or take advantage of more specialized opportunities driven by the dislocation in the market.

“The current market environment is providing some exciting investment opportunities at attractive valuations,” Jake Fingert, partner Camber Creek, said in an announcement. The continuation of fundraising success for proptech strategies is a continuing theme. Last year’s Proptech 20 ranking was approximately double the size of PERE‘s inaugural list.

Sponda moves its carbon goalposts
In the same week it was denied an extension to a loan covering part of its portfolio, the Finnish real estate company Sponda itself announced an aggressive target for carbon neutrality by 2025. The goalposts were brought forward five years after Sponda reduced energy consumption across its portfolio by 9.1 percent in 2022, against an interim target of 12 percent by 2025, it said in a statement. Despite tracking ahead of schedule, CEO Christian Hohenthal said “we feel that we can do better and therefore wanted

to challenge ourselves and our stakeholders to be bolder in our ambitions.” The company also plans to significantly increase its renewable energy production.

Data snapshot

Merging momentum
Despite a challenging interest rate environment affecting values, real estate merger & acquisition activity maintained some momentum, according to Hodes Weill’s 2022 M&A report. That could continue in 2023, Doug Weill, founder, told PERE. Read the full story here.

People moves

Remaining industrious
Just a couple of years after New York-based Ares Management assumed control of Denver-based Black Creek Group, two of the people brought over under the deal now have expanded roles as the firm looks to grow its sizeable 800-property portfolio. Dwight Merriman takes up the mantle as chair of Ares Industrial Management, the firm’s dedicated industrial business, as well as chair of its investment committee. Alongside Bill Benjamin, Ares’ global head of real estate, Merriman will also co-chair the board of directors of Ares Industrial Real Estate Trust, a rebranded Black Creek vehicle purchased as part of the merger. David Fazekas [his LinkedIn here] will assume Merriman’s old position of head of Ares Industrial Management. “We continue to have high conviction in the attractive secular tailwinds for the industrial sector and believe there is a compelling opportunity to further expand our capabilities and portfolio,” Merriman said in an announcement.

Investor watch

GIC cautions away from China

Last month, PERE reported that Hong Kong-based private equity real estate firm Gaw Capital Partners had agreed with a set of North American investors to ringfence their equity commitments from China investments made for the latest in its pan-Asia opportunity fund series. Concerns over heightened risks associated with government policies prompted the investors to make their request – even though the Chinese government has performed an about-turn on its zero-covid policy, effectively opening up the country’s economy.

According to the Financial Times last week, concerns have now risen in Asia too. The newspaper reported how Singapore’s sovereign wealth fund, GIC, is keen to exercise caution when it comes to backing private market offerings in China. The report claims growing concerns about US-China relations have impacted the state investor’s appetite for more exposure and that existing bets have been hit, in part, by issues in the country’s property market. Look out for PERE’s next cover story, which explores investor attitudes to China investments.

 

This week’s investor meetings

Tuesday, February 21

Wednesday, February 22

Thursday, February 23

Friday, February 24

Today’s letter was prepared by Peter Benson with Jonathan Brasse, Evelyn Lee, Charlotte D’Souza and Christie Ou contributing