PERE 50: A post-crisis shake-up

The elimination of funds closed in 2007 from this year’s ranking has caused the biggest reshuffling of top firms in recent memory Changes abound in this year’s ranking of the largest private equity real estate in the world in terms of fundraising activity. First and most obvious is that the ranking has expanded from 30 firms to 50 this year. This is partly the result of the increased capabilities of PERE’s Research & Analytics team, which did much of the grunt work for this year’s ranking, as well as the desire to offer our  readers a  wider, more comprehensive look at fundraising activity across the market. 

Secondly, the PERE 50 has experienced the biggest reshuffling of firms at the top of the ranking in recent memory. Much of this is due to the elimination of large funds that closed in 2007 and now fall outside the ranking’s five-year fundraising window. Among the casualties are the real estate investment arms of investment banks Morgan Stanley and Goldman Sachs, which declined nine and five spots respectively, as well as private real estate firms such as Beacon Capital Partners and Rockpoint Group. Indeed, Beacon fell 20 places as some $4 billion was shaved from its five-year tally, while Rockpoint dropped 16 spots and now is relying solely on the fund it just closed earlier this year.

The problem for these firms is that much of the capital that has fallen outside the PERE 50’s five-year fundraising window has not been replaced with new equity or it has been replaced at a slower rate and with a lesser amount. Meanwhile, a number of firms have shifted their focus to strategies that are not included in the PERE 50 ranking, such as real estate debt, or have stopped raising their capital through traditional closed-ended commingled funds in favor of other structures sought by LPs.

That said, some firms did find success with new vehicles over the past five quarters. Indeed, three of the biggest fundraisers over the past five quarters also happen to be the biggest climbers in the PERE 50. Starwood Capital Group closed its latest opportunity fund on $4.2 billion, which propelled the firm some 10 spots in the ranking. Brookfield Asset Management, which is in the middle of marketing its first global opportunity fund, moved up 14 spots on the strength of $2.63 billion in equity raised so far. Last but not least, Fortress Investment Group also jumped 14 spots in the ranking due largely to the success of its second Japan-focused fund, which closed on $1.65 billion late last year.

In the face of all those changes, one thing did not change. The Blackstone Group cemented its place as far and away the biggest capital-raiser in the PERE 50 ranking,thanks to the $13.3 billion collected for its most-recent global offering, which is the largest commingled real estate fund ever raised. Indeed, so big is that fund that, had Blackstone not raised another penny over the past five years, the firm still would be atop the ranking. As it is, it raised a total of nearly $32 billion, which is more than the next four firm combined.

Looking at the PERE 50 as a whole, the cutoff for capital raised in order to make this year’s ranking was $1.37 billion over the past five years. Obviously, that is much less than the $2.21 billion cut-off of last year, when just 30 firms were ranked. However, if you look at just the top 30 firms this year, you will see that the cut-off for that sub-group rose to $2.42 billion.

Meanwhile, the expansion of the ranking, as well as the aforementioned reshuffling of firms, has opened the door for several new players to emerge. First-time members of the PERE 50 include notable firms like CapitaLand, Oaktree Capital Management, Niam, GTIS Partners and Crow Holdings, among others. In addition, there were five firms $60 million or less from making the PERE 50, including Europa Capital Management and Iron Point Real Estate Partners. With the disappearance of 2008 funds in next year’s ranking, it is a good bet that these firms will make the cut in 2014.               

The PERE 50

1 The Blackstone Group 
2 Starwood Capital Group
3 Lone Star Funds 
4 Colony Capital 
5 LaSalle Investment Management 
6 Tishman Speyer
7 The Carlyle Group 
8 Goldman Sachs Real Estate Principal Investment Area
9 Brookfield Asset Management 
10 MGPA
11 Morgan Stanley Real Estate Investing 
12 CBRE Global Investors
13 Westbrook Partners 
14 AREA Property Partners 
15 Angelo, Gordon & Co 
16 Prudential Real Estate Investors 
17 Shorenstein Properties 
18 CapitaLand 
19 Fortress Investment Group 
20 TA Associates Realty 
21 Oaktree Capital Mangement 
22 Bank of America Merrill Lynch Global Principal Investments 
23 Walton Street Capital 
24 Northwood Investors 
25 Perella Weinberg Partners 
26 Lubert-Adler Partners 
27 AEW Global 
28 Beacon Capital Partners 
29 Orion Capital Managers 
30 Alpha Investment Partners 
31 DRA Advisors 
32 KSL Capital Partners 
33 ARA Asset Management 
34 Rockpoint Group 
35 Niam 
36 Hemisferio Sul Investimentos
37 Hines 
38 GI Partners 
39 Cerberus Capital Management 
40 GTIS Partners 
41 Invesco Real Estate 
42 Crow Holdings 
43 CIM Group 
44 Rockwood Capital 
45 Berkshire Property Advisors 
46 Harrison Street Real Estate Capital 
47 GE Capital Real Estate 
48 Kayne Anderson Real Estate Advisors 
49 Spear Street Capital 
50 Stockbridge Capital Group 
 

Methodology

The PERE 50 measures equity raised between 1 January 2008 and mid-April 2013 for direct real estate investment through closed-ended, commingled real estate funds and co-investment vehicles that sit alongside those funds. The vehicles must give the GP discretion over the capital, meaning club funds, separate accounts and joint ventures are excluded from the ranking. Also excluded are funds with strategies other than value-added and opportunistic, such as core and core-plus, as well as those not focused on direct real estate, like fund of funds and debt funds, and funds where the primary strategy is not real estatefocused, such as general private equity.