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EDITOR'S LETTER: The safety car is out

If you have ever watched motorsports such as Formula One or the Indianapolis 500, you are aware of the safety car. After a crash, out comes the souped-up street car to slow the race cars down, effectively reducing any gaps between them. Everyone has to fall into line behind the car: you continue to move forward, but you don’t overtake.   

This can be seen as a loose metaphor for private equity real estate investing at this moment, as a major incident on one part of the track (Europe) needs to be cleared up. The safety car is out there while stewards (Germany, France plus other EU members and interested parties) try to clear debris. In fact, we don’t yet know the seriousness of the crash, but we hope that when activity resumes there will be a frenetic resumption of activity.

To some degree, this issue of PERE reflects that, as GPs and large global investors generally have seen a slowdown in getting deals completed. At the same time, both parties are eyeing a healthy pipeline. 

Beginning on page 30, we speak to Joseph Azrack of Apollo Global Management, which is carefully making its way on the road to a fully formed international real estate platform, picking off deals as it goes along. Azrack humbly says his ‘crystal ball’ isn’t what it used to be, but we think you will find the story of how Apollo is approaching the real estate market to be a revealing one.

Then, on page 54, James Comtois speaks to three US players about how the tremors from Europe are impacting the American property market in PERE’s US roundtable. As Rockwood Capital’s Peter Falco says, people are beginning to recognise that recovery in the US will be slow. As a result, they’re revising expectations down from ‘too optimistic’ to something more realistic, which ultimately should lead to a very good investment horizon.

Last but not least, PERE attempts to answer the question of where the capital commitments for future investments are going to come from. In our first-ever ranking of the largest global real estate investors, starting on page 42, the PERE team profiles the 30 institutions with the wherewithal to make deals happen. It is a must-read for everyone in the industry.

As for the Formula One series, I am informed that this month’s race is in Abu Dhabi at the new Yas Marina circuit. With the longest straight on the F1 calendar, as well as tight corners, it is sure to be one of the most demanding tracks in the world.

It seems private equity real estate firms and investors will need to navigate a similar course.

Good luck and enjoy the issue!

Robin Marriott
Editor, PERE