PERE 50: Shape and stability prevails

Calmer waters have come to the PERE 50 ranking now that franchises chewed up in the global financial crisis have seen their pre-crisis funds forgotten.

The PERE 50 ranking, PERE’s signature ranking of private equity real estate firms by capital raised over the last five years, took an air of stability this year as only two new firms forced their way in.

Charleston-based, residential investment manager Greystar Real Estate Partners and New York-based growth investor Almanac Realty Investors were the only new entrants in this year’s ranking. Such a dearth of new entrants is in stark contrast with last year’s ranking which included 14 new entrants, many of which have remained.

This year’s ranking further consolidates something of a new order for higher risk and return investing in private real estate after a number of the firms that raised most of their capital around the global financial crisis, but suffered from poor performance after, have fallen away.

Greystar entered the ranking at number 18. Though a new entrant in the PERE 50, the firm was established back in 1992 by chairman and chief executive officer Bob Faith, primarily as a developer and manager of multifamily residential property in the US.

Latterly, the firm has deployed capital in the student accommodation sector too and has invested beyond US borders as well. Last month, for example, it purchased Nido London, a student housing portfolio comprising almost 2,400 beds, for £600 million (€842 million; $903 million).

The firm raised $3.2 billion over the last five years for its flagship Greystar Equity Partners Fund series, including $800 million for Greystar Equity Partners Fund VIII in March 2014.

Almanac, meanwhile, also was a new entrant in the PERE 50 and a firm which charts its history to before the millennium. It raises private funds to provide growth capital to public and private real estate companies. An example of a recent private investment was a $200 million commitment to New York-developer Winter Properties while public investments it has made include up to $150 million each in Drawbridge Realty Trust and NRES Holdings and $100 million in the RAIT Financial Trust.

The firm is understood to be in the market with Almanac Realty Securities VII for which it is seeking $1 billion. That follows the $819 million raised for predecessor fund Almanac Realty Securities VI.

Greystar and Almanac were two of a US-firm denominated ranking this year with only six non-US firms making the cut. The firms were: Global Logistic Properties, Mapletree Investments, Kildare Partners, ECE Real Estate Partners, PAG and Gaw Capital Partners.

Such US-centricity comes as increasing numbers of institutional investors accept higher risk and return strategies in order to continue investing in private real estate stateside. In aggregate, $224 billion was raised by the PERE 50 in 2015’s ranking, up 27 percent on last year’s ranking.

The star performer in the ranking continued to be The Blackstone Group which raised $46.3 billion, $14.2 billion more than in 2014. The New York powerhouse, which has led the ranking since 2008, has now raised more equity than the second, third and fourth placed firms together – they raised a combined $36.1 billion. It has even raised more capital for higher-yielding private real estate investment strategies than the GDP of 77 countries. Such feats are even more astonishing given that the ranking does not take into account the money it has raised recently for core investment strategies.

To access the ranking in full, click here.