“Especially for transitional assets, we’re not borrowing at all”

The initial SVB fallout on real estate borrowers
“There were many fund managers who did not sleep well this weekend.” That was the comment that Roger Singer, partner at law firm Gibson Dunn, shared with PERE in the aftermath of the Silicon Valley Bank’s collapse on Friday. It was the second largest bank failure in US history. Amid the initial fallout, borrowers were unable to communicate with anyone at the bank as of Monday morning. “There’s theoretically an FDIC line, but no one picks it up,” according to one source familiar with the matter. By contrast, Signature Bank, a US regional bank that shut down on Sunday, still had people at work and answering the phones, the source said. Meanwhile, one manager told investors it had “an atypically large cash balance” of $30 million in one of its fund accounts at SVB and was “hopeful there will be a majority, if not total, recovery of the dollars currently at risk,” in an email seen by PERE. For more on the short-term and longer-term impact of the bank failures on the private real estate industry, check out our coverage here.

Fund managers’ China dilemma
Long-simmering US-China tensions have been reaching a boiling point in recent weeks, following an alleged Chinese spy balloon being spotted over North American airspace last month and Chinese president Xi Jinping’s sharp rebuke of the US for isolating his country just last week. It is against this backdrop of deteriorating US-China relations that PERE is publishing its March cover story, The China Conundrum, on how managers raising Asia-Pacific funds are accommodating investors – predominantly North American institutions – that want to have exposure to the overall region but also keep their capital out of China. The dilemma that these firms face, however, is that many consider China – the largest economy in the region and the second-largest in the world – to be too important a market to be excluded from a pan-Asia investment strategy. Read more in our cover story here.

MIPIM bound
The movers and shakers of the global real estate community will descend on the world’s largest property conference this week. MIPIM expects more than 23,000 people to attend in Cannes this year, with delegates representing 90 different countries and responsible for €4 trillion of managed assets. Whether it is repricing, refinancing or repurposing, there are myriad decisions facing the industry, meaning this year’s MIPIM will have an air of uncertainty around it, much like the market it represents.

In attendance from our ranks are Charlotte D’Souza for PERE, Dan Cunningham for Real Estate Capital Europe and Samantha Rowan for Real Estate Capital USA. To name drop some of the firms in their diaries: AXA IM Alts, Hines, LaSalle Investment Management, Nuveen Real Estate, Aareal Bank, AEW, PIMCO and Oxford Properties. Keep an eye out over the coming weeks for coverage based on what we are hearing at MIPIM.

Room in town for two
You would be forgiven for thinking first of Copenhagen’s NREP when considering institutional real estate managers covering the Nordics region, given the firm’s fundraising successes and generally high visibility over recent years. But seven years before NREP’s inception came Stockholm-based Niam. Founded in 1998, the firm was considered a trailblazer when it came to enticing international, institutional capital to the region. The firm remains very much in the fight for capital. Last week, it emerged US pension California State Teachers’ Retirement System had approved a $204 million commitment to its eighth opportunity fund, Niam Nordic VIII, for which the firm is seeking to raise €1.5 billion. That target amount is almost 50 percent smaller than NREP’s target for its latest Nordics vehicle, NREP Nordics Strategies Fund V, which carries a €2.7 billion target. But it is still some 36 percent more than the €1.1 billion corralled for Niam Nordic VII, which closed in 2019. Such ambitious targets demonstrate there is enough activity in the region for two big private real estate managers to be relevant to the capital markets.

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