The public sphere

After several years spent licking their wounds—buffeted by accounting scandals, Sarbanes-Oxley and lackluster stock prices—publicly traded companies seem to be making a comeback, at least on the acquisition front. Private equity buyers on both sides of the Atlantic are noting the increased presence of strategic buyers in auction processes. And in the private equity real estate arena, publicly traded Pinnacle Entertainment looks set to best Colony Capital in its attempted takeover of casino operator Aztar (p. 15).

Even the public markets as fertile hunting ground for private equity real estate firms—witness the number of REITs recently taken private—may soon be coming to an end. Jonathan Gray, senior managing director of Blackstone Real Estate Advisors, told a conference last month that the arbitrage between public and private valuations is rapidly disappearing (p. 6).

In Europe, the public markets are abuzz with matters of a different sort: the possible introduction of REITs in the UK and Germany. It's not just the public markets, however, that should be paying attention to this growing trend. Our special report on the topic, beginning on p. 29, looks at the impact these vehicles could have on the European property landscape, particularly for opportunity funds in the region.

In Europe and beyond, private equity real estate partnerships operate away from the glare of public scrutiny. Last month, however, we took that spotlight and shined it on the GP/LP relationship, asking a select group of general partners and industry practitioners to give us their opinions on the institutional investor community. Check out p. 42 for the illuminating results.

Of course, the institutional investor community has opinions of its own. On p. 24, we profile Terry Ahern, chief executive officer of The Townsend Group, one of the largest institutional real estate consultants in the world, who gives us his take on the past and present state of the global real estate market. Having spent two decades in the business, he also provides some advice for the general partner community. Hint: follow the advice of Spike Lee.

Do the right thing and enjoy the issue,

Paul Fruchbom