Blueprint: The key to NREP’s biggest Nordic core-plus fund, Brookfield’s selling spree, Greystar’s thunder Down Under

How NREP raised the biggest Nordics-focused core-plus fund during the pandemic; why Brookfield is in selling mode; Greystar's Australian debut; and more in today's briefing, exclusively for our valued subscribers.

He said it

“Real estate, just because of the sentiment that’s out there, we have less capital coming in. But I think you’re going to see that change, as the market resolves itself over 2021.” 

Bruce FlattBrookfield chief executive, on the future of core real estate during the firm’s earnings call last week.

What’s new?

Gatekeeper gains
NREP has now raised the largest core-plus Nordics fund with the €900 million first closing of its Income Plus fund, PERE revealed yesterday. CEO Claus Mathisen attributed the strong investor interest in the vehicle in large part to the firm’s pledge to deploy capital fast. The firm has already committed €600 million into five deals, including a mega COOP distribution center in Oslo. But a second reason for the notable support was the use of consultants by the fund’s investors, he said. Mathisen pointed out how the raise, entirely executed since covid-19 started, benefited from these gatekeepers, which were able to undertake the due diligence their investors could not.

Seller’s market
Brookfield Asset Management is in sales mode. The Canadian firm has been busy monetizing its investments to take advantage of what it sees as a favorable macro environment. Since transaction activity began ramping up in Q3 2020, Brookfield has sold more than $15 billion of assets across various platforms, chief financial officer Nick Goodman said during its Q4 2020 earnings call last week, crystallizing total gains of approximately $6 billion. Real estate was no exception to this trend. In selling its life sciences portfolio to Blackstone, Brookfield achieved a 2.7x multiple on invested capital, and a 55 percent IRR. It also successfully launched an Indian REIT in early February, which ended up being eight times oversubscribed, representing an IRR of over 30 percent and multiple capital of roughly three times. For the right assets and the right products, it is a good time sell.

Thunder Down Under
Greystar Real Estate is making noise in Australia with its first ever investment fund targeting the country, which just closed on A$1.3 billion ($1 billion; €830 million) last week. The South Carolina-based multifamily expert is partnering with Canadian pension investor Ivanhoé Cambridge, Dutch pension manager APG and one other large, unnamed European group. The vehicle, Greystar Australia Multifamily Venture I, will look to develop rental apartments in the country, something the partners see as an unmet opportunity. “We see it as simply a matter of time before the build-to-rent residential sector gains a foothold in all the key Asia-Pacific markets,” Graeme Torre, managing director of APG, said.

High-value content
How disconnected are valuations from the market currently? How appropriate is the use of market value during times of distortion? Invesco Real Estate’s head of valuations Amy White, M&G real estate finance director Nick Brown, RICS’ global director of valuation Ben Elder, and Chatham Financial director and valuation practice leader John Kjelstrom will address these important questions and others during the second PERE Global Passport Deep Dive this Thursday, February 18. PERE editor Evelyn Lee will moderate the session. For more information, click here and to join email:

Data snapshot

Solid footing
Total transaction numbers in the APAC region tumbled during 2020 but ended the year stronger than during any quarter in 2019.

Trending topic

Digital draw
Data centers are becoming a widely coveted property type for institutional investors, especially when they can be accessed through private structures. Case in point: last week, Toronto-based insurer Manulife acquired a $150 million share in the Seattle-based owner, operator and developer Sabey Data Center Properties. Investing through its US subsidiary, John Hancock Life Insurance, Manulife joins the Sabey Corporation and National Real Estate Advisors, the real estate arm of a US electrical workers’ pension, in a strategic partnership that controls three million square feet of multi-tenant data center space throughout the US. As we highlighted in our Friday Letter last week [found here], while private market opportunities to access digital assets are in short supply, demand for them is anything but.

Office offline
The future continues to look bleak for offices. The latest forecast from real estate consultant and asset manager Townsend Group predicts a 9-12 percent decline in occupier demand over the next three to five years. The group sees this trend resulting from some groups opting for hybrid home-office work models while others eschew traditional spaces altogether. In its report, Townsend cites a survey of companies that shows only 60 percent favor a zero-allowance policy for working from home, down from 87 percent previously. Should these projections hold true, they would be a post-pandemic boon to top-tier offices and flexible space providers, but trouble for the sector more broadly.

People moves

Starwood’s newest star
Khalif Edwards has joined Starwood Capital Group as a managing director in its global capital raising and investor relations group. Before making the switch at the beginning of the month, Edwards was a managing director at Los Angeles-based multifamily specialist CityView, where he also led capital raising efforts and investor relations. Prior to that, he worked as a fundraiser for New York-based Clarion Partners, focusing on the West Coast of the US.

Investor watch

What to expect with Japan’s first endowment fund
Real estate managers can look forward to the launch of Japan’s first endowment fund in March 2022 as it is understood the asset class will become a key component of the ¥10 trillion ($94 billion; €78 billion) government fund over the long term. The formation of the endowment is still in the early stages, but industry players expect the governance and the investment strategy of the fund will resemble the country’s leading pension fund Government Pension Investment Fund. If the fund is successful in diversifying its portfolio in alternative asset classes in a timely manner, it will become an important bellwether for other Japanese investors that have traditionally been more conservative in making new investments.

This week’s investor meetings:
Tuesday, Feb. 16

Thursday, Feb. 18

Friday, Feb. 19

Today’s letter was prepared by Kyle Campbell with Jonathan BrasseEvelyn LeeArshiya Khullar and Christie Ou contributing.

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