Making their mark

Every investor, private equity real estate or otherwise, knows a good deal when they see one—or, at the very least, when they see the profits hit their bank account. But what makes a deal a landmark? Answering that question involves a bit of art, a bit of research and a lot of subjectivity.

Nevertheless, an overriding definition could perhaps be as follows: a transaction that has not only influenced those lucky (or unlucky) enough to have been involved in the deal, but one that has shaped the evolution of the industry itself.

Over the past decade and a half, private equity real estate has evolved from a few US fund managers buying distressed assets into a sophisticated global asset class. Today, opportunity fund managers not only manage hundreds of billions of dollars, they have also acquired, at one time or another, some landmarks of their own, including Rockefeller Center in New York City.

In the course of covering the private equity real estate industry, one often hears references to these landmark transactions, those deals that have influenced not just the wallets of those involved, but, more importantly, the transformation of the asset class from a cottage industry into a worldwide powerhouse. Here, we present our picks for the top 20.

In compiling this list, our journalists spoke with dozens of industry participants around the world. And we asked them to give us their picks for the most significant private equity real estate deals in history, as well as the rationale for their decisions. In our search, we contacted limited partners, pension fund advisors, placement agents, consultants and, yes, even fund managers—although GPs were prevented from nominating one of their own deals. Ultimately, however, it was our editorial team that distilled those responses into the 20 transactions that, in our judgment, have had the most resonance and impact.

We begin in the late 1980s with the acquisition of a Houston office building by the very first opportunity fund and end, interestingly enough, 17 years later with the sale of a large-scale residential portfolio in New York City. One of the key men involved in both deals: Sam Zell. In fact, looking at the list, one is struck by the repeated mention of several high-profile names, Goldman Sachs and Colony Capital among them—maybe size does matter, at least when it comes to landmark status.

These landmark transactions have influenced not just the wallets of those involved, but, more importantly, the transformation of the asset class from a cottage industry into a worldwide powerhouse.

But not all the transactions presented here are the biggest or the best. We also include one of the biggest losses in the asset class' history, as well as the man behind the deal, who eventually recovered to turn a small, failing real estate investment trust into one of the largest hotel companies in the world.

Another interesting aspect of our list is its geographic breadth: 10 deals in the US, seven in Europe and three in Asia. Though the US continues to dominate the asset class in terms of size, it does not have a monopoly on influence in today's global marketplace. Nevertheless, many of the US firms and figures that dominated the industry in its earliest days show up in our list not only for their work at home but also for spreading the gospel of private equity real estate to Europe and Asia.

A few caveats: Though innovations in the capital markets, such as the advent of CMBS and the proliferation of REITs, no doubt heavily influenced the development of the asset class, we have focused specifically on equity deals for the purpose of this list. That said, not all of the parties involved in our selections are private equity real estate firms. Other investors, be they investment firms, public institutions or private individuals, have also been known to lead the way.

We anticipate that not all our readers will be pleased with our list, be it some glaring omission or a sin of inclusion. That, unfortunately, is the nature of list-making—and, of course, half the fun. If you have any additional suggestions, feel free to send them our way. After all, the private equity real estate industry is still young. Another landmark could be just around the corner.