PERE Awards 2009: Asia winners

ASIA INDUSTRY FIGURE OF THE YEAR

1. ANDIE KANG, The National Pension Service of Korea
2.  Richard Price, ING Real Estate Investment Management
3. Simon Treacy, MGPA

When Kim Hee-Seok, the head of the global investment team at Korea’s $200 billion National Pension Service, told Reuters last July the fund would increase its exposure to alternative assets to 6.4 percent from 3 percent, the real estate sector embraced itself for a wall of capital to appear. The immediate message to potential investment partners was that Korea wanted to invest $3 billion in the core markets of London, New York, Tokyo and Sydney before the year was out. And senior portfolio manager Kang, who leads a global real estate investment team of three, almost got there too. The capital came as predicted, although predominately through co-investing or separate account investing – not that commingled funds are off the table, Kang assures us.NPS spent big in London, Tokyo and Sydney leaving just New York from the strategy. Kang says the US was left out because of tax implications but expect continued large investment from NPS going forward across its other target markets.

ASIA FIRM OF THE YEAR

1.  MGPA
2.  China Investment Corporation
3.  Secured Capital Japan

Sitting on stage at the PERE Forum: Asia in February, MGPA’s chief executive officer Jim Quille admitted 2009 was a “tough year”. So in anticipation of the market malaise to come, the firm scaled back a previously expansive acquisitions programme which saw it invest more than $2 billion in Singapore’s Marina Bay area in 2008. Cognisant of the world around them, MGPA adopted defensive measures. It increased its companywide reserve liquidity level from 12 percent to closer to 25 percent “to provide more of a cushion” against possible falling loan to value ratios; stepped up asset management activities and focused energies on banking relationships. That’s not to say MGPA ceased investment trading completely. While it was more active in Europe, the firm committed RM 2 billion (€424 million; $538 million) to a four-property, mixed-use portfolio in Malaysia on behalf of its second pan-continent fund, MGPA Asia Fund II. The investment in the Kuala Lumpur city centre development, close to the world famous Petronas Twin Towers, brought the number of acquisitions in the fund to 35. But according to its chief executive for development, Michael Wilkinson, MGPA’s spending in the country won’t stop there. MGPA also takes the plaudits for knowing when to sell as exemplified by its exit from 181 Queen’s Road in Central, Hong Kong in August at a more than attractive average exit yield of 3.4 percent.

ASIA DEAL OF THE YEAR

1.  181 QUEEN’S ROAD, HONG KONG
2.   Lehman Brothers’ debt portfolio, Japan
3.  New City Asia Opportunity Fund

It was the archetypal asset management play. Originally developed in 1999, MGPA, and its partners bought the 29-storey city centre office in May 2006 on behalf of its MGPA Fund II for $306 million with the view that it was significantly under-rented. Its centrality and close connectivity to Hong Kong’s transport links meant location was never a problem. Added to this, the fact that the building’s main tenants include the Urban Renewal Authority and financial firms Celestial Asia Securities, BOCI Securities and Junan Securities, meant the building had become an attractive proposition for investors. MGPA made its exit on a strata, or floor-by-floor, basis. Starting by allowing pre-refurbishment commitments on the lower, less desirable floors, the firm managed to sell 30 percent of the office before even publicly marketing the remaining floors. As a result, MGPA has realised HK$434 billion of sales in total reflecting an average yield of 3.4 percent.


ASIA FUNDRAISE OF THE YEAR

1.  LONE STAR REAL ESTATE FUND II
2.    Secured Capital Japan Real Estate Partners IV
3.  Fudo Capital II, CLSA Capital Partners

By PERE estimates, as little as $3.5 billion was closed by Asia-focused private equity real estate funds in 2009. Rewind 12 months and that Asia fundraising figure was $18.4 billion. Set against palpable fear from LPs to commit capital over the past year, Lone Star’s reported capture of $725 million for its second real estate fund, Lone Star Real Estate Fund II, is a commendable achievement. Only Tokyo’s KK daVinci and CLSA closed on marginally more (daVinci’s fifth fund closed on $830 million in February, while CLSA’s Fudo Capital II managed $815 million in November). However, the major difference between them, is that while daVinci and CLSA held final closings, Lone Star is still on the fundraising trail. Perhaps last April’s target of $10 billion in equity could be considered ambitious given the reluctance by some of the world’s largest limited partners to re-up. But founder Grayken’s powers of persuasion have proved time and again to be successful, as was seen when Oregon Investment Council committed $300 million to Fund II. Coupled with a track record of impressive returns, Lone Star expects another successful haul for Real Estate Fund II and probably fund III, IV, V …

ASIA DEBT INVESTOR OF THE YEAR

1.  LONE STAR JAPAN
2.  Angelo, Gordon & Co
3.  CLSA Capital Partners

If you are a real estate fund management or lending business in distress, there is every chance John Grayken’s Lone Star will be under your floor waiting for it to break. Across the Dallas-based firm’s gargantuan empire, its Asia division, led by president Takehisa Takamatsu is no different. While the firm was ultimately unsuccessful in its rescue of Japan’s first failed J-REIT, New City Residence Corp – despite originally reaching an agreement to buy it for $130 million last April  – it was able to flex its bargain-hunting muscles when sifting through the remains of Lehman Brother’s Japanese business. PERE exclusively revealed in September that Lone Star had purchased $10 billion of performing and non-performing loans from Lehman’s Japanese loan units, Lehman Brothers Commercial Mortgage KK and Sunrise Finance Company, for less than $300 million after they were placed on the market following the parent company’s bankruptcy. The loans, all secured against commercial properties, were purchased in three pools at different dates in the year on behalf of Lone Star’s Lone Star Fund VI, which closed on $7.5 billion in December 2007. Lone Star’s loan servicing business, Hudson Advisors, has 250 staff in Japan. No doubt this headline-grabbing capture will have kept every one of them busy.

ASIA PLACEMENT AGENT OF THE YEAR

1.  MACQUARIE CAPITAL ADVISORS
2. Credit Suisse
3. Probitas Partners

It is an understatement to say fundraising was difficult in 2009, even though Macquarie Capital still managed to place more than $1 billion for institutional investors. Under the leadership of Brett Robson, Macquarie Capital’s real estate team refocused its efforts on providing real estate solutions for investors and property companies. In 2009, Macquarie Capital advised on fund recapitalisations, strategic partnerships and secondary transactions. Among its standout achievements was the strategic partnership between China Investment Corporation and the Canadian Pension Plan Investment Board with Australian logistics developer and fund manager, Goodman Group. Macquarie Capital advised on CIC’s purchase of A$500 million (€292 million; $420 million) of exchangeable hybrid securities in Goodman, while CPPIB formed a A$200 million joint venture with Goodman to invest in assets across mainland China. It was this ability to evolve its services in line with market conditions, backed by a strong fundraising history – more than $10 billion of external capital for real estate over the last four years – that has led Macquarie Capital to win PERE’s Asia placement agent of the year title year-on-year.


ASIA FUNDS OF FUNDS OF THE YEAR

1.  PARTNERS GROUP
2.  Franklin Templeton
Real Estate Advisors
3.  CBRE Investors

Singapore is Swiss-based Partners Group’s biggest “foreign” office, not New York or London. That fact alone tells you something about the firm’s activity in Asia, which is led by Partners’ co-head of real estate, Pam Alsterlind. It is perhaps no surprise Partners has grown in Asia. In 2008, the firm’s Nori Gerardo Lietz said investors were increasingly looking to invest in specialised regional funds as opposed to “global” investment strategies. She added Asia Pacific and emerging markets would get a “disproportionate” amount of the available capital. And Partners is putting its money where its mouth is. The new Partners Group Global Real Estate 2008 fund made secondary investments in China last year, with the firm also chosen to execute a secondaries investment in a Vietnam-based fund with existing income-generating assets. It is buying a commitment was made several years ago with the portfolio consisting of offices, residential and hospitality assets.


ASIA LAW FIRM OF THE YEAR (FUND FORMATION)

1.  MAYER BROWN
2. Paul Hastings
3.  King & Spalding

Mayer Brown is growing a reputation for its fund formation services. Toppling last year’s winner, Clifford Chance, from the number one spot in this category is no mean feat but through the formation of interesting and unusual funds, such as Singapore-based Banyan Tree’s Indochina Hospitality Fund, the firm is beginning to take stage centre stage. One of the few Asia funds to hold a final closing last year, the Indochina Hospitality Fund, captured the imagination of investors including HSIL Investments, a subsidiary of HSBC, and the conglomerate investor Nan Fung Group. The pair invested a combined USD283 million into the vehicle, even though the fund had already pre-identified its investment opportunity – a mixed-use leisure resort development on the coastline of Vietnam. Phillip Smith, Mayer Brown’s partner in charge of the deal, has proved a dab hand in a number of fields if a glance at his resume is anything to go by. Prior milestones inlcude Dragon Capital’s formation of a Vietnamese debt fund, advising Credit Agricole on the formation of its global equities CAAM Green Planet Fund and helping Regal Hotels on the formation of its REIT. It certainly pays to have such diversified talent among one’s ranks.

ASIA LAW FIRM OF THE YEAR (TRANSACTIONS)

1.  PAUL HASTINGS
2.  Clifford Chance
3.  Mayer Brown

It wasn’t just private equity real estate fund managers which saw 2009 as a year to improve communication outflows. As Paul Hastings proved to great effect, law firms can also play that game. The Los Angeles-based firm, with more than 190 staff on its books, launched a number of initiatives including hosting a teleconference series on distressed investment issues and strategies and publishing a stream of client alerts and publications aimed at keeping its clients informed of market events. The strategy evidently paid off as the firm found itself deeply involved in some of the region’s largest real estate stories. Of particular note, was its involvement in the repositioning, sale and liquidation of the Asia assets of collapsed bank Lehman Brothers. 2009 was also the year of the return of Hong Kong IPOs and the introduction of RMB-denominated funds in China. To that end, Paul Hastings advised on five IPOs and one RMB-fund. Star performers last year included long-time regional servant Joel Rothstein, Shanghai-based partner David Blumenfeld and Tokyo-based partner Joshua Isenberg. It was efforts from the likes of these three that meant Paul Hastings has retained the award for Asia law firm of the year (transactions) two years running.


ASIA LIMITED PARTNER OF THE YEAR

1.  CHINA INVESTMENT CORPORATION
2.  The National Pension Service of Korea
3. GIC Real Estate

While other cornerstone investors scaled back their investment programmes in 2009, China Investment Corporation wasted no time in committing large swathes of its $200 billion capital pile last year.  An $800 million commitment to Morgan Stanley Real Estate Fund VII Global surfaced at the beginning of 2009, just as Collin Lau was hired from Starr International to lead CIC’s real estate investment strategy. Under Lau’s leadership, CIC has expanded its investment remit to include investment clubs, aligning $1 billion of capital to Brookfield Asset Management’s $5 billion turnaround consortium. Just how successful the consortium will be remains to be seen, however CIC’s evolution in allocating capital to structures where it has more control was mirrored by other large investors, including the Australian Future Fund, the Canadian Pension Plan Investment Board, the Public Sector Pension of Canada and Singapore’s GIC, who all reportedly pledged capital to Brookfield’s club deal. With CIC expected to get an additional $200 billion of capital to play with from China’s massive foreign exchange reserves, it’s little surprise the market voted CIC Asia limited partner of the year.

ASIA BROKER OF THE YEAR

1.  Richard Ellis
2.  NAI Global
3.  DTZ

Where there was investment action in Asia, often there was Richard Ellis. The Los Angeles-based property services firm was advisor to Singapore’s largest private residential land sale in two years – the Parisian site at Anguilla Park. The hugely sought-after plot, complete with planning permission for a 36-storey development, was sold to China Sonangol International for SG$283 million (€148 million; $201 million). Deals like this meant that CBRE’s Asia Pacific platform, led operationally by president and chief executive officer for Asia Chris Brooke, could report an increase in revenue of 43 percent come the fourth quarter of 2009. CBRE says such results reflect better business performance throughout the region. Little wonder then, in addition to becoming the first commercial real estate services company in the Fortune 500, the firm finds itself PERE’s Asia broker of the year as well.