Global Industry Figure of the Year
1. Neel Kashkari, US Troubled Asset Relief Program
2. John Grayken, Lone Star Funds
3. John Gray, The Blackstone Group
As a 35-year-old, just six years out of business school, Neel Kashkari was not an obvious choice to lead the US government's
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Neel Kashkari |
$700 billion bailout programme. However in 2008, as the banking system lurched from one crisis to another, then-Treasury Secretary Henry Paulson named Kashkari as the man charged with steering the Troubled Asset Relief Program. Having joined the Treasury in 2006 straight out of the ranks of Goldman Sachs, Kashkari worked closely with Paulson as his special assistant, or “handyman” as the New York Times billed him. By the summer of 2008, Ohio-born Kashkari was appointed assistant secretary for international economics. Then the world, figuratively, crashed before the Bush administration's eyes. On 6 October, 2008, Kashkari was named interim head of the new Office of Financial Stability – the man at the driving wheel of TARP. And his task was monumental. From its inception, TARP was expected to be a panacea for America's woes. The bailout would help free up balance sheets of toxic assets, provide banks with additional liquidity and help kick-start the credit markets, according to supporters. But by focusing its energy on recapitalising struggling financial institutions, TARP has also been criticised for neither reviving the banks nor their lending. Of course, that's now a job for President Barack Obama and new Treasury Secretary Tim Geithner.
Global Firm of the Year
1. LaSalle Investment Management
2. MGPA
3. Lone Star Funds
2008 will be remembered for many things, but for PERE's Global firm of the year it will undoubtedly be remembered as the Year
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Jeff Jacobson |
of Asia. During the past 12 months, LaSalle Investment Management has been one of the industry's leading companies in investing and fundraising for the Asia region. Indeed, the $3 billion LaSalle Asia Opportunity Fund III, which closed in September after a year of raising capital, marked a high point for the Chicago-based firm when the fund became the second largest dedicated Asia property vehicle of 2008. LaSalle has invested 20 percent of the vehicle to date. One of the deals includes a joint venture with industrial developer Realty Vailog to acquire logistic facilities in Shanghai. The joint venture has been seeded with $112 million of properties. Led by global chief executive officer Jeff Jacobson, LaSalle however didn't just concentrate its efforts on Asia in 2008. The firm also pushed ahead with more opportunistic investments creating a special situations team targeting the UK and Europe, and opening an office in Milan. The firm was reportedly raising a European real estate venture during 2008 targeting €5 billion of acquisitions.
Global Deal of the Year
1. The Blackstone Group, Shanghai Changshou Commercial Plaza
2. Goldman Sachs Real Estate Principal Investment Area/The Related Group, Hudson Yards, New York
3. Cerberus Capital Management, Canadian Imperial Bank of Commerce $1bn residential loan portfolio
For the past 18 months Blackstone has largely been invisible in the real estate deal world. After winning a raft of PERE awards
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Schwarzman |
last year for the $39 billion acquisition (and partial disposal) of Equity Office Properties and the $26 billion buyout of the Hilton Hotel empire, Blackstone decided to significantly scale back its investments and instead accumulate capital. However, the firm – which has corralled a $13 billion real estate “war chest” following its voluntary move to the sidelines – has returned to the fore, clinching PERE's Global and Asian deal of the year awards for its renegotiation of the Changshou Commercial Plaza deal. In June, the New York-based firm, founded by Stephen Schwarzman, agreed to buy a 90 percent stake of the Shanghai centre for RMB625.5 million (roughly $90 million; €70 million). By November, China's property markets had changed dramatically, offering Blackstone the chance to renegotiate with the seller, Hong Kong-based financial services firm VXL Capital. Blackstone closed the deal for RMB536.7 million cash for a 95 percent stake. As Blackstone's senior managing director Garrett Moran told the China Business Weekly, some of the “best investments” would be made in declining markets.
Global Exit of the Year
1. HSBC, Canary Wharf headquarters sale
2. Morgan Stanley/Starwood Capital, Westin Tokyo sale
3. Niam/Goldman Sachs Whitehall, sale of Finnish Pasaati shopping centre
If there was one deal to sum up the highs and lows of 2008 – and the volatility of the global real estate markets – it has to be the
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HSBC Tower |
sale of the HSBC Tower in London. When HSBC sold its Canary Wharf headquarters to Spanish property group Metrovacesa in May 2007 for £1.1 billion (around $2 billion) it set an all-time record. The deal was the UK's largest-ever commercial property deal, with Metrovacesa accepting an annual yield of just 4 percent in return for buying one of the most high profile buildings in London. Built at the turn of the millennium for some £500 million by HSBC, it also marked an extremely lucrative deal for the global bank. As part of the deal, financed by a syndicate of banks including Royal Bank of Scotland, Hypo Real Estate and Barclays, HSBC agreed to lease back the 210-metre tower for 20 years at an annual rent of £43.5 million. Just 18 months after the deal closed though, the world changed and by December 2008, Metrovacesa had sold back the tower to HSBC for just £838 million – a loss of £262 million in a year and a half. For HSBC it was the deal of the decade.
Global Fundraise of the Year
1. MGPA Fund III, $5.2bn
2. Lone Star Real Estate Fund I, $2.5bn
3. Blackstone Real Estate Partners Europe II, €3bn
Look back at 2008 and you'd be mistaken for thinking the fundraising landscape offered nothing more to view than fund
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managers struggling through bleak and barren, wind-swept moors. Certainly the latter half of the year presented firms with plenty of challenges if they were in the market with a property fund. However during the first six months of 2008, there was plenty to write about in terms of capital raising – especially for vehicles focused on Asia. MGPA's $5.2 billion MGPA Fund III, which combined the firm's third European and Asia vehicles, was one of the most notable. Closed in June, the fund saw more than two-thirds of previous investors recommitting to the firm, including some of the world's largest sovereign wealth funds. Alex Jeffrey, chief executive of Europe at MGPA, told PERE at the time the firm was confident it would achieve 2x multiples and opportunistic returns of 17 to 20 percent. “If you can move quickly, the emerging [market] dislocation, and even distress, means you can pick up assets at below true value.” In Europe, MGPA said it would target mature markets such as France and Germany as well as Central and Eastern European countries, while in Asia the fund would look to opportunities in Singapore, Japan, China and Thailand among others.
Global Debt Provider of the Year
1. Bank of America
2. Credit Suisse
3. Sumitomo Mitsui Banking Group
At a time when many large financial institutions are retreating from the commercial real estate lending world, Bank of America is proving to be one organisation that is still very much open for business. As the bank's chief executive officer Kenneth Lewis told politicians in Congress last month: “We are still lending, and we are lending far more because of the TARP.” The US bank has had an interesting year, receiving more than $45 billion in bailout funds from the US government's Troubled Asset Relief Program, taking over troubled investment bank Merrill Lynch and needing $118 billion in “back-stop” guarantees from the US Treasury. Yet throughout the turmoil, Bank of America has continued to lend. In the fourth quarter of 2008 alone, the bank said it provided more than $7 billion in real estate loans and bought more than $20 billion in mortgage-backed securities. It also provided a $4 billion revolving line of credit to Beacon Capital Partners' latest fund, the $6 billion Beacon Capital Strategic Partners VI. Declining real estate markets globally will make their mark felt in 2009. However, as Lewis says, Bank of America is still in the market to lend. And that's something private equity real estate wants to hear.
Global Placement Agent of the Year
1. Credit Suisse Real Estate Private Fund Group
2. Merrill Lynch
3. M3 Capital Partners
How much is it possible for one real estate placement agent to raise in a really, really tough year? $5.5 billion, it would seem. That's how much Credit Suisse's Real Estate Private Fund Group managed to gather as it underlined credentials as the top placement agent in the PERE awards. A supplementary question is how many fund closes are possible in a year like 2008? The answer to that is nine, as well as nine interim closings. Unlike previous years, the team, co-headed by Bill Thompson and David Hodes found itself working on fewer first-time funds. Instead it was working for funds with rather more Roman numerals as a flight to experience took place. As well as pulling in the capital, corporately the firm has been moving with the times. Last year it put in place new businesses – secondary deals, infrastructure, and joint ventures – plus developing business in the Middle East, Asia and Australia.
Global Law Firm of the Year (Transactions)
1. Clifford Chance
2. Haynes & Boone
3. Simpson Thatcher
Clifford Chance is a true global player in the real estate field. And despite the recent slowdown in the real estate markets, the firm continues to be involved in high-profile instructions, especially those involving Middle Eastern investors. As Clifford Chance was advising Barclays on its acquisition of Lehman Brothers' North America operations in 2008, the law firm's real estate team – led by Clive McAuley – were helping close landmark deals of their own. Most notable was the £959 million (€1.07 billion; $1.4 billion) acquisition and financing of Chelsea Barracks by Qatari Diar and CPC Group, the development company owned by the Candy Brothers. The deal, completed in January 2008, was the first significant real estate Islamic financing in the UK and became one of the most expensive development site purchases in UK history. However that wasn't all for the firm in 2008. Another highlight was advising on the first issuing of a real estate “sukuk” (equivalent to an Islamic bond) in Makkah, Saudi Arabia, on behalf of the Purple Island Corp., a special purpose vehicle affiliated with the Saudi Bin Ladin Group, and the first Shariah compliant sale and leaseback of industrial equipment in the French market.
Global Law Firm of the Year (Fund Formation)
1. Clifford Chance
2. Goodwin Procter
3. King & Spalding
Fundraising in 2008 may have fallen from its all-time record levels of 2007, but there was still business to be done during the past year, and Clifford Chance was the global firm of choice, according to PERE readers. With more than 30 offices in 21 countries and 3,800 legal advisers, Clifford Chance's presence globally is undisputed. And during 2008, it was the New York-based private funds practice that helped catapult the firm into pole position in this year's awards. Taking the lead on Merrill Lynch's debut Asia property fund, the US private funds team – led by Roger Singer – also stole the fund formation limelight with its work for AIG Global Investments and Berkshire Income Realty. During the third quarter of 2008, AIG was simultaneously raising three real estate funds targeting Asia, Europe and India – often with overlapping pools of investors. Berkshire's US housing fund, the $600 million Berkshire Multifamily Value Add Fund II, was raised during even more challenging times, with one investor to the fund about to be taken over by the US government. Led by Singer and Chris Roman from New York, Clifford Chance helped the firm close the fund in the final quarter of 2008.
Global Advisor of the Year
1. The Townsend Group
2. Partners Group
3. Franklin Templeton
When you advise some of the world's largest public pensions in the world, it's safe to say you exert some influence in the
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private equity real estate world. The Townsend Group is no exception, advising pension funds and sovereign wealth funds such as the $126.4 billion California State Teachers' Retirement System (CalSTRS), the government of Thailand and ATP in Denmark. For Townsend, 2008 was fraught with challenges. LPs were struggling with declining distributions, fears of capital call default and the denominator effect. However, in many cases Townsend clients reiterated their commitment to the real estate asset class, rather than retreating. CalSTRS was one of the most notable, increasing its target allocation range to 17 percent from 11 percent. Appointed CalSTRS consultant in December 2007, it has been Townsend that has urged the pension to increase its exposure to international real estate. Founded in 1983 by managing partners Terry Ahern and Kevin Lynch, Townsend now has a truly global reach advising and investing on behalf of more than 150 institutional investors and sovereign wealth funds. The Cleveland, Ohio-based firm is currently retained by more than 90 institutional investors with net real estate assets in excess of $90 billion.
Global Limited Partner of the Year
1. California Public Employees' Retirement System (CalPERS)
2. The Government of Singapore Investment Corporation (GIC Real Estate)
3. Yale University
It was a tough year for all limited partners. As one of the world's largest public pensions, 2008 was particularly painful for the $174 billion California Public Employees' Retirement System (CalPERS). Not only did CalPERS see the value of its overall fund decline from a peak of $250 billion in 2007, the Sacramento-based pension also saw its real estate allocation break through its 10 percent target to rest at 11.5 percent as of press time. Yet despite these issues, CalPERS remained committed to real estate, particularly in emerging markets. During 2008 the pension – which appointed its first female chief executive officer, Anne Stausboll, in December – announced plans to increase five-fold its allocation to countries such as China, India, Brazil, Mexico and Turkey. Emerging market investments currently account for around 3.6 percent of total real estate allocations. But it wasn't just emerging markets that benefited from CalPERS investments last year, so too did Starwood Capital and JER Partners among others. The firms both received commitments of $400 million and $500 million respectively to their latest funds, the $3 billion Starwood Capital Global Hospitality II and JER Partners' Latin America Fund I.
Global Developer of the Year
1. Hines
2. Tishman Speyer
3. CapitaLand
There are not many developers who can say they've worked with the likes of noted architects Cesar Pelli and Frank Gehry.
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Hines' Peachtree |
Having been around for more than 50 years, however, Hines can. Starting life as a one-man operation, the Houston-based firm now has 3,700 employees and assets under management of more than $25 billion. It has completed 969 projects, including the office tower Tour EDF in Paris, with another 141 (comprising 73.8 million square feet of space) under development as of June 2008. It has also raised $15 billion in equity since 1991 through 29 property vehicles. Hines hit the headlines in September when it, together with MetLife Real Estate Investments, paid $235 million for the site of San Francisco's planned 1,000-foot Transbay Tower. At approximately $4,900 per square foot, the price was a record for the area. It is also expected to be the tallest building on the US West Coast. The size of the development though shouldn't come as a surprise as the architect is Cesar Pelli's firm, Pelli Clarke Pelli, of Kuala Lumpur Petronas Twin Towers fame. One thing will be certain though, the Transbay development will be sustainable. Hines has repeatedly won awards for its green buildings.
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