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CBRE Multi plots $800m ‘programmatic JV’ investment in 2014

The multi-manager business of CBRE Global Investors deployed half the $1.6bn it invested in 2013 in strategic partnerships with operating partners and expects to do likewise this year.

The multi-manager investment platform of the world’s largest property investment manager, CBRE Global Investors, is planning to deploy as much as $800 million via a strategy it has dubbed as ‘programmatic joint ventures’.

In a further sign that multi-managers in the private real estate market are evolving further from offering straight fund of funds products, CBRE Global said such an outlay would represent about half of the equity it deployed across its business lines in 2013.

The platform’s global head Jeremy Plummer told PERE last week at the annual MIPIM conference, that the amount deployed ultimately depended on how much dry powder was left from last year and how much more is raised. But he said: “It could be as much $800 million and that could account for as many as eight transactions. It could easily by half of the equity we deploy.”

The strategy sees CBRE Global Investors Multi-Manager pool capital from institutional investors and deploy that capital into joint ventures with particular operating partners focused on particular markets and geographies. Typical equity commitments to the firm’s programmatic joint venture strategy from CBRE’s investors are in the $100 million to $200 million range.

Outlays made by the firm into the ventures are the in the $100 million range. Among its current partnerships, the firm is invested in a venture with US firm Cornerstone Real Estate Advisors for a US mezzanine debt strategy and with Irish investment manager Ardstone Capital for a regional UK and Ireland offices strategy. Both of those ventures was constructed on a 50:50 basis and capitalized with $200 million of equity. CBRE also is invested in a European student accommodation strategy with Watkins Jones.

Plummer described CBRE’s programmatic joint ventures as evergreen in nature, meaning they would have no set expiry. Through these ventures, it would also seek core-plus returns, typically low-teen IRRs. Plummer said: “Buy in the right market at the right time with this profile and you often do better than that.”

While the firm has invested via programmatic joint ventures in Europe and the US, it is yet to deploy capital via this strategy in Asia, but Plummer expected that the platform would do so shortly.

Meanwhile elsewhere in the region, the firm is close to closing its third Asia fund of funds, the latest in a series of funds of funds deployed into more opportunistic strategies in the region. Plummer would not discuss capital raising for the vehicle, but PERE learned that its Asia Alpha Plus Fund III is nearing its $300 million target and is due to be closed to investors in the summer. Similar to the firm’s previous Asia fund of funds, the investments of the vehicle predominantly have been identified and are to consist of investments made via secondary trades or into clubs and joint ventures.