Accompanying PERE’s first special report on debt funds is our inaugural top 50 ranking of global private real estate debt fund managers – RED 50 for short.
Compiled by our colleagues in the PERE research & analytics team, the list is based on the capital raised for debt issuance funds between 2014 and 2018. And a familiar name occupies the number one spot – Blackstone. North American-based managers, in fact, dominate the ranking – 32 feature in total, likely a reflection of the maturity of the market stateside compared to other regions.
European managers take up 16 places in RED 50 with London-headquartered ICG-Longbow the region’s top dog in third place followed by M&G Investments in fourth and DRC Capital falling just outside the top 10 in eleventh position. Asia-Pacific-based fund managers fare less well, with just two managers – Melbourne-headquartered Qualitas and Japan’s Diamond Realty Management – in RED 50.
Now, we continue our countdown…
New York-based KKR invests in commercial real estate debt through two distinct strategies. KKR Real Estate Credit Opportunity Partners, RECOP, is a fund that invests in junior tranches of new issue commercial mortgage-backed securities. RECOP closed at the end of 2017 on $1.1 billion. As of December 31, 2018, RECOP was 71 percent invested. KKR Real Estate Finance Trust is an externally managed REIT focusing on originating senior commercial mortgage loans on transitional properties. The real estate credit team has 18 professionals, headed by Matt Salem.
GreenOak Real Estate
GreenOak’s debt platform was established in 2012 by the senior management team led by Jim Blakemore. Headquartered in London, the 13-strong team has raised about $2.6 billion of capital to focus on providing senior, junior and whole loans to support sponsors to implement their business plans and create value. The firm has local presence across Europe and is an active lender in the UK and Western Europe. Currently, there are three funds under management: GreenOak UK Secured Lending Fund I; GreenOak UK Secured Lending Fund II; and GreenOak Europe Secured Lending Fund I.
Colony Capital has been investing in credit since inception in 1991. It established the CDCF Series in 2008 for credit investments and, to date, has raised approximately $5 billion of commitments through four funds.
The CDCF Series focuses on the origination of high-yield debt and similar financing facilities including mezzanine debt and preferred equity, the acquisition of individual and portfolios of performing, sub-performing, and/or non-performing loans and real estate-owned assets, and investments in real estate-related, distressed or special situations. The team is led by Kevin Traenkle.
Founded in 2006 by CEO Paul Rolles, AgFe is a fully independent advisory and asset management firm specializing in complex debt-based investments. Initially specialized in providing advisory services in the private and public sectors including to central banks, regulators, commercial banks, asset managers and other companies, it branched out in 2013 when it began raising a £1 billion debut fund to lend to UK real estate. Brent Williams, a managing partner who joined in 2008, is responsible for the day-to-day management of the firm.
Kayne Anderson Capital Advisors
Kayne Anderson Real Estate Debt, or KARED, focuses on Freddie Mac B-Pieces and invests across subordinated debt. Its first debt fund, KARED I, closed in the fall of 2016 on more than $700 million in commitments, while KARED III made its first investment at the end of 2017.
The debt team is headed by Karen Kulvin and Andrew Smith, co-portfolio managers and managing directors. The firm has a total $6 billion in assets under management, including $2.5 billion in real estate debt assets.
Nuveen Real Estate
Nuveen’s global commercial real estate debt platform invests across the capital structure, seeking income-focused, stable risk-adjusted total returns for investors. Nuveen offers open- and closed-end private funds, co-investment opportunities and separately managed accounts and finances a range of assets from industrial, office, retail and multifamily to more alternative sectors such as student housing and self-storage.
The team is led by Jack Gay, managing director and head of debt, real estate, who has dubbed commercial real estate debt as “superfood” to institutional investors’ portfolios by enhancing performance thanks to stable returns.
BlackRock invests in loans secured by commercial properties such as offices, apartments, retail centers and hotels in the US, Europe and Asia-Pacific. In March, it created a real assets debt group, combining its $10.5 billion infrastructure debt platform with its real estate debt business to create a single real assets debt platform worth more than $11 billion.
Robert Karnes, who previously led the real estate debt group, leads the unit. Funds in this strategy include BlackRock US Real Estate Senior Mezzanine Debt Fund.
Bridge Investment Group
Salt Lake City, Utah
Bridge Debt Strategies Fund Manager invests in commercial real estate-backed fixed income, focusing on underserved debt markets; more specifically Freddie Mac K-Series B-pieces and first mortgage lending on value-add opportunities in multifamily, office and senior housing assets.
The team is led by James Chung, chief investment officer, who worked at Morgan Stanley before joining Bridge in 2013. Founded in 1991, Bridge Investment Group invests in multifamily, office, senior housing, medical properties, affordable housing and real estate debt strategies. The firm currently has $13.5 billion in assets under management.
Prime Finance, part of Prime Group, a real estate equity and debt investment and operating platform, directly originates mortgages, mezzanine, participation and preferred equity financing. It also acquires performing, sub-performing and distressed assets, and invests in B-Pieces of CMBS.
Recent transactions include an $18 million five-year floating rate first mortgage loan for a 120-unit student housing complex in Berkeley, California, and a $27.6 million five-year floating rate first mortgage for a 70-unit historic retail and residential building in Los Angeles.
DRC Capital is a value-add investment advisor focusing on the commercial real estate debt sector across the UK and Europe. Through its 20-person debt team based in London, led by managing partner Dale Lattanzio, it offers advisory and origination services to borrowers and investors.
Since forming in 2008, DRC has arranged more than £2 billion ($2.7 billion; €2.4 billion) of debt investments for its client base. In 2018, it provided an €83.8 million whole loan to assist in the acquisition of a portfolio of Spanish hypermarkets.