EDITOR'S LETTER: Stuck in the middle

Stealers Wheel’s “Stuck in the Middle with You” was written the year I was born, but it wasn’t until 1992 that I checked out the lyrics for the first time. That was when Quentin Tarantino’s Reservoir Dogs made use of the song in that messy ear scene.

Last month, I was given a reason to check the words out again for this issue of PERE, having been reminded of the song by the takeover of two mid-sized private equity real estate firms – MGPA and AREA Property Partners. Here’s the part of the song that seems to sum up those two situations: “Yes, I’m stuck in the middle with you / And I’m wondering what it is I should do / It’s so hard to keep this smile from my face / Losing control, yeah, I’m all over the place / Clowns to the left of me / Jokers to the right / Here I am, stuck in the middle with you.”

Well, the unofficial take is that mid-sized fund managers have a problem nowadays. They are not big enough to absolutely ensure survival let alone growth and not small and targeted enough either, so they need a new home. Meanwhile, it is no secret that there are companies out there with deep enough pockets and steely determination to grow a real estate investment management business emphatically via acquisitions.

Given that mergers don’t happen that often, you will not be surprised that this month’s issue contains special reports on both of the takeovers, so be sure to turn to James Comtois’ special report on Ares Management’s takeover of AREA on page 10 and Jonathan Brasse’s interview with both BlackRock and MGPA on page 14.

By the way, advisors in these transactions played their part. By a happy coincidence, this month we happen to explore the role of advisors in the private equity real estate industry. For example, starting on page 40, Evelyn Lee explores how law firm are keeping up with their real estate clients.

Elsewhere in the issue, our Blueprint interview is with the new global head of real estate at UBS, which with $65 billion in assets under management already is big enough not to need a corporate deal to bulk up. Turn to page 32 to read about Thomas Wels’ strategy to diversify the business.

Don’t worry, we haven’t completely neglected property. Starting on page 44, we examine the UK in a roundtable discussion hosted at Tristan Capital Partners’ offices in Mayfair, where participants examined the various strategies that can work, particularly outside of London. And there’s plenty more coverage of North America, Europe and Asia in our news analysis sections.

As Stealers Wheel said in its song: “We try to make some sense of it all / but I can see that it makes no sense at all!”

Enjoy the issue,
Robin Marriott