Despite macroeconomic and geopolitical disruptions significantly weighing on the European private real estate industry, the region’s biggest influencers did not shy away from making large, diversified plays in 2023. While residential and logistics continued to prominently feature among various award-winning deals, the spotlight shone equally on formerly challenged sectors such as retail and hospitality.
Singaporean sovereign wealth fund GIC was crowned the Institutional Investor of the Year for the third consecutive year, amassing 46 percent of the overall votes in the category. One of the firm’s standout deals in 2023 was in hospitality, acquiring a 35 percent stake in the €4 billion Southern European hotel chain Hotel Investment Partners from Blackstone.
Meanwhile, Starwood Capital, which swept up three awards in total, demonstrated notable diversification in its investment strategy. It won the Debt Firm of the Year for closing on over $950 million in deals across five jurisdictions and four asset classes, including €180 million in financing of a diversified portfolio of boutique luxury hotels across Europe.
The firm also took home Firm of the Year: Southern Europe, as well as the Hotels & Leisure Investor of 2023 for its pursuits in the sector, particularly the acquisition of a 50 percent interest in an Italian real estate finance lease portfolio, and sale of a Spanish hotel asset. Similarly, Henderson Park bagged the Firm of the Year: France award for a number of well-executed transactions, including the sale of the Westin Paris – Vendome in a deal valuing the hotel at around €650 million.
The recent recovery in hospitality and retail follows two years of pandemic-driven disruption. Since 2022, increased leisure and business travel across Europe, particularly for various sporting and business events, has buoyed demand for various hotel categories. The hotel industry in the region is expected to be worth €43.9 billion by 2027, according to a report published by global market research firm Mobility Foresights.
A similar rebound is occurring in the retail sector, with offline and online retail sales forecast to grow at pre-covid levels for the first time in the region in 2024. Slate Asset Management is one firm to have successfully capitalized on the sector’s imminent recovery.
Long-term favorites
The Toronto-based firm won the European Deal of the Year award – its first PERE award – for its acquisition of a retail portfolio in Germany for approximately €1 billion, making it one of the largest portfolio deals in Europe last year.
Logistics, a highly preferred sector among institutional investors due to its long-term income generating potential and favorable secular trends, faced challenges in 2023 amid macroeconomic pressures, higher financing costs and valuation mismatches between buyers and sellers. In the UK, total investment into logistics and industrial was £6.4 billion ($8.1 billion; €7.5 billion) in 2023, compared with £14.4 billion in 2022, according to real estate services firm Cushman and Wakefield.
It may come as no surprise that real estate’s largest manager, Blackstone, was successful in closing multiple logistics deals in the UK and across Europe, despite a challenging environment. While Blackstone’s take-private transaction of the UK’s Industrials REIT lost out in the deals category, the £700 million acquisition helped the New York-headquartered manager bag the Logistics Investor of the Year award.
During the course of the year, Blackstone also launched two UK logistics CMBS, purchased two of the UK’s best-known industrial estates for around £480 million and acquired a logistics portfolio in Sweden for €471 million.
The man who oversaw these acquisitions, Blackstone’s European real estate head James Seppala, won the Industry Figure of the Year award for the second year running, a testament of his astute leadership and investment strategy in the region. In addition to logistics, Seppala also steered several investments in residential – a sector that now appears to have become a staple in the portfolio of Europe’s award winners.
The strengthening appeal for residential assets, or the living sector more broadly, can be attributed to multiple factors. The increase in mortgage rates has made renting more affordable compared with home purchases across Europe, which, coupled with population growth and demographic trends, has led to a surge in housing demand.
With 658 votes, Greystar won Firm of the Year for Europe for executing €1.6 billion of transactions and increasing its AUM in Europe by 22 percent. Highlight investments included a joint venture to acquire a portfolio of rental housing units in Spain, multiple build-to-rent developments in the UK, as well as niche bets such as developing purpose-built student housing in France and Spain.
Tying with Starwood Capital for the highest number of awards in the region is CBRE Investment Management. The Los Angeles-headquartered firm won the Residential Investor of the Year award as well as Firm of the Year for Germany for its acquisition of five multifamily assets in that country for €560 million.
In addition, CBRE made a large residential portfolio acquisition in Berlin, while completing developments in Italy, the Netherlands, Spain, Sweden and the UK. CBRE Investment Management also garnered an impressive vote share to win the ESG Firm of the Year.
Fundraising champions
2023 was a poor fundraising year for the asset class. According to PERE’s fundraising report, $138.83 billion was raised across 309 funds during the year, an 11-year low.
Within this reduced pool of fund closes, a few outperformers emerged. In May, Urban Partners’ Northern European real estate business NREP closed NREP Nordic Strategies Fund V on €3.65 billion, exceeding its target size of €2.7 billion.
With this closing, the vehicle became the largest Europe-focused fund closed in 2023, as well as the largest private real estate fund ever raised for the Nordics. This fundraising feat helped NREP clinch the Capital Raise of the Year, as well as the Nordics Firm of the Year.
Meanwhile, Lazard took home the Capital Advisory of the Year award, winning 41 percent of the total votes in the category, for successfully steering multiple capital raises, including around €1 billion for King Street’s Real Estate Fund III, and a first close for Meridia’s Real Estate Fund V.
2023 was a year when investors continued to place their bets, albeit selectively, on large, established managers, and resilient and recovering sectors. With the economic picture showing signs of improving in 2024, as inflation falls and the monetary hiking cycle nears its end, the asset mix – and the top performing pool of managers – could look vastly different during the next awards cycle.
First-time winners: Slate and ICG
The firms took home the European Deal of the Year and Data Centers Investor of the Year awards, respectively
At a time of continued concentration of capital among large, established managers, and muted deal activity, two firms made their way into the history books by making successful, well-timed investment bets.
Toronto-based Slate Asset Management won the European Deal of the Year award by beating last year’s winner Blackstone for its mega €1 billion acquisition of a 188-grocery-anchored retail portfolio in Germany. The transaction, which the firm had been working on for more than a year, was executed in a challenging environment. According to MSCI’s Q2 2023 Global Capital Trends report, just over $12 billion worth of deal activity was done during the quarter in Germany, down 59 percent year-on-year.
Joining Slate Asset Management in the list of first-time winners is the real estate investment management business of London-based asset manager ICG, which won the Data Centers Investor of the Year award. Among the firm’s highlight deals was the purchase of a portfolio of offices and data centers in central London leased to Vodafone for £125 million.
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