The issue of PERE currently in your hands comes to you nearly four years after the demise of Lehman Brothers. While 1,460 days, or 23,000 waking hours, haven’t proven long enough for everything to be shaken out of the tree, many things have.
Take US investors for instance. We know many pension plans now have a strong thirst for core property and an aversion to risk, meaning opportunity funds are less in favour. As it turns out, the core real estate in their portfolios appears to have served them well. In a special report starting on page 37, Evelyn Lee explains how such investments have led to strong returns for a number of large public plans during the most-recent fiscal year.
Before that focus on US pension, PERE turns its attention to a much more secretive set – the endowments of Ivy League universities. Based on our report, which begins on page 32, it seems clear that many school endowments have less cash for real estate. Meanwhile, the rich kids of the Ivy League – Harvard University – are doing their own thing, building out direct investment via partnerships with operators.
Of course, international investors have not rejected real estate en masse at all, and many still like emerging markets. For an alternative take on the theme, PERE’s Jonathan Brasse strayed off the beaten path this summer for an all-access visit to a development site in a third-tier market in China, where foreign capital is hoping to gain a foothold in the retail sector. You can read his appraisal of that opportunity starting on page 26.
Meanwhile, in Europe, the question of demand for European opportunity funds is not a settled one. This month, Patron Capital is hotly tipped to announce the close of its latest fund, and it looks certain to be the largest close this year. Still, is that a reliable indicator of how other managers on the fundraising trail will fare? See page 15 for an analysis.
We also touch on a new scary monster in Europe called the IORP directive, which some say could cull real estate investment by pension plans. For details on a potential nightmare you absolutely need to be aware of, see this month’s Eurozone on page 14.
Lastly, don’t forget to check out the accompanying supplement, The 2012 Guide to Private Equity Real Estate Fund Administration & Technology. It is loaded with analysis on the latest regulatory and technology developments, as well as expert commentary.
So, welcome back from the summer break – if indeed you managed one. As one London private equity real estate investment professional remarked the other day, there is no such thing as out-of-office. We here at PERE sympathise.
Enjoy the issue,