The private real estate universe is growing, and PERE’s annual list of the biggest capital providers is growing with it. Our Global Investor 50 this year added 20 extra names to reflect the significant expansion and diversification of institutional investors in the private real estate space.
The ranking tracks discretionary equity committed to real estate through commingled funds, separate accounts, joint ventures, club vehicles and direct acquisitions. A full methodology – and the entire ranking itself – can be found here.
Now, we continue our countdown with the investors from 29-20…
Standard Life Investments
A new entry last year, the Edinburgh-based firm has dropped three places despite increasing its real estate commitment by more than $250 million.
The firm’s year was dominated by the mega-merger of parent company Standard Life with fellow Scots Aberdeen Asset Management to create Europe’s second largest fund manager, with £660 billion ($810 billion; €762 billion) in assets under management. The merger meant the newly ormed company had around £46 billion in real estate assets, including the equity invested for Standard Life’s insurance business counted in this ranking.
In July, the firm announced it was creating joint co-global real estate heads with Standard’s head of real estate investments, David Paine, and Aberdeen’s global head of property, Pertti Vanhanen, stepping into the joint roles. With 2017 a year of reorganization, the market awaits its first real estate purchase under new management.
British Columbia Investment Management Corporation
QuadReal, the real estate arm of the British Columbia Investment Management Corporation, had a busy first year. It launched in June 2016 with an 87 percent Canada-focused portfolio, which the team is diversifying to 50 percent Canada and 50 percent in the Americas, Europe and Asia.
To grow its platform, QuadReal brought in former AXA Investment Management – Real Assets chief investment officer Dennis Lopez as global chief executive in May. That month it made its first US student housing investment, earmarking $600 million to a JV with CA Student Living and GI Partners.
QuadReal plans to grow via further JVs and club deals, along with strategic fund investing, comprising less than 10 percent of its portfolio. It also plans to open new offices: in London in 2018 or 2019, and then in the US and Asia.
Washington State Investment Board
The Washington State Investment Board continues to execute its diversified strategy, largely through controlling interests in real estate operating companies. The $120.4 billion pension system, which invests on behalf of 35 funds, has partnered with 14 different investment managers including Morgan Stanley, Warburg Pincus and Pacific Realty. The investor has bet the most on residential real estate, which comprised 28.7 percent of its real estate portfolio as of June 30. Industrial came in second, with 23.5 percent of the portfolio, followed by retail, healthcare and self-storage, at 17.4 percent, 7.5 percent and 5.6 percent, respectively. Office, land, debt and other real estate comprised the remainder of WSIB’s real estate holdings.
Geographically, the institution is focused on creating a global rather than a US-centric property portfolio, including an active presence in emerging markets. The investor has also backed Aevitas, which has a focus on the Mediterranean, India and western European countries.
MetLife slid one place in the ranking after finishing 25th in 2015 and 2016. The New York-based firm plays close to home in its investments, anchoring its portfolio in coastal cities with an emphasis on core real estate and office, though it invests across the return spectrum and property types.
Sales have been in the cards recently, including one long-term hold. The firm bought 85 Broad Street, a 30-story New York office building, in 1985 for $74.4 million, then sold a 50 percent stake to Beacon Capital Partners in 2014 in a deal valuing the building at $350 million. In May, the partners sold the whole property for $650 million. Over the year, the firm bought 10 buildings and sold 12, and holds interests in 171 assets, according to Real Capital Analytics.
Kuwait Investment Authority
HQ: Al Asimah
Sovereign wealth fund Kuwait Investment Authority has been active in private real estate, both via fund investing as well as taking direct exposure. That is expected to continue with Farouk Bastaki, the former executive director for alternative investments, taking on the fund’s managing director role.
KIA has been an active investor in US property markets and intends to increase its exposure. Kuwait’s deputy prime minister and minister of finance Anas Al-Saleh told the Kuwait News Agency that KIA plans to grow its US investments 20-fold, including investments in real estate and real estate development and financing.
The Kuwaiti investor has flexed its muscle elsewhere, too. KIA was among a group of Middle Eastern investors that backed a $500 million European real estate platform set up by Henderson Park. According to reports, the platform is investing in value-added and opportunistic properties in the continent, including the acquisition of Athens Ledra Hotel for €33 million this June, marking the platform’s entry into the Greek market.
One highlight for the Public Sector Pension Investment Board this year was a big bet on US multifamily. This came via a new partnership with Alberta Investment Management Corporation and Toronto-based Starlight Investments to buy $1.3 billion-worth of newly built apartment properties in Atlanta, Austin, Dallas, Denver, Tampa and Phoenix.
“We are entering into this newly formed partnership with great excitement and expectations,” said Neil Cunningham, global head of real estate and natural resource at PSP Investments.
Europe was another focus for PSP. In May, the pension opened its London office, which will house its Europe-focused real estate, private equity, private debt and infrastructure teams. PSP’s fiscal year 2017 real estate activities in the region included expanding both its London student housing portfolio with Greystar UK and its European logistics partnership with Segro.
Ontario Municipal Employees Retirement System
In 2017, Ontario Municipal Employees Retirement System, via real estate arm Oxford Properties Group, leapt 11 spots in the ranking as its real estate holdings rose by more than $7 billion. Yet despite the sharp rise, Oxford’s highest-profile deal was the agreed sale in March of The Leadenhall Building for £1.15 billion ($1.41 billion; €1.35 billion) to Hong Kong-based real estate investor CC Land Holdings.
Oxford had been “a reluctant seller,” as partner British Land opted to offload its 50 percent interest in the property after the Brexit referendum, chief executive Blake Hutcheson said in May. Despite the prospect of Brexit, he noted that the UK was getting more capital than ever, which made it a good time to sell in the market. At the same time, Oxford was also developing new assets in London, which were expected to come online in the next 36-48 months, post-divorce.
The real estate investment arm of Italian insurer Assicurazioni Generali spent a large portion of 2017 in a state of flux. The investor was under the tutelage of chief operating officer Francesco Benvenuti, who stepped in as interim general manager following the resignation of Christian Delaire in March 2016. After a year searching for a permanent replacement, Generali appointed Aldo Mazzocco as chief executive.
During this personnel flux, the insurer remained an active real estate buyer. In March, Generali acquired a Madrid retail property for $105.5 million, for example. In July, chief investment officer Tim Ryan singled out real assets as an area of increased focus for the group. So, while it may have slid down this year’s ranking with $14.5 billion invested in real estate, a stable top order and growth plans could see Generali inch toward the upper echelon of property investors.
Zurich Insurance Group
Swiss institutional capital typically prefers a more cautious approach to real estate investing, often favoring core strategies in its home market. However, noting that domestic real estate has reached full maturity, Cornel Widmer, global head of real estate at the Swiss insurer, had previously said it intended to grow in assets under management by an additional €1 billion globally.
The investor was true to its word, finalizing mandates worth €200 million and €400 million for Asia and Europe, respectively, to UBS Asset Management in 2016. Traditionally a core and core-plus investor, the insurer is now able to take on more risk and look at value-add properties, too.
Zurich Insurance currently has $16.2 billion invested in total real estate assets. The firm has 6.6 percent of the group’s total $202 billion portfolio allocated to property and with a real estate allocation target of 7.4 percent the insurance giant can expect to play an increasingly important role in PERE’s ranking.
Germany’s largest public pension fund, Bayerische Versorgungskammer, has been rapidly expanding its real estate holdings via large separate account mandates in recent years. It was a similar story in 2017. BVK handed a €750 million mandate to USAA Real Estate Company in May to invest in US multifamily as the first of four planned specialized US mandates.
In Europe, the pension fund awarded a €250 million separate account to Universal-Investment, the Frankfurt-based investment manager, and GPEP, the Frankfurt-based asset manager in July to invest in supermarkets and retail centers throughout Germany, across the full range of risk strategies.
BVK was quieter in Asia this year as it gave three managers a total of €700 million to invest in Asian real estate in 2015. If the German giant, which already boasts $16.29 billion invested in real estate, continues its investment pace it will continue to feature among the globe’s largest property investors.
For PERE Investor 50 profiles 5-1, click here.
For PERE Investor 50 profiles 10-6, click here.
For PERE Investor 50 profiles 19-11, click here
For PERE Investor 50 profiles 39-30, click here.
For PERE Investor 50 profiles 50-40, click here.