In 1926, the US Supreme Court delivered a ruling that irredeemably changed the face of the US. Siding with the small farming village of Euclid over the future use of 68 acres of land, the Supreme Court judge, Justice Sutherland, argued that local communities did indeed have the right to police all land use within their boundaries. It was synonymous, he said at the time, with dealing with “a pig in the parlor instead of the barnyard.” For more than 80 years, Justice Sutherland's verdict has played a major role in shaping the landscape of US cities and communities. Evolving into the theory of Euclidian zoning, Justice Sutherland's ruling has ensured the continued segregation of different types of land use from residential, commercial to industrial. Critics argue it has also been the main driving force behind urban sprawl.
“The trend has always been to try to stop buildings from going up, to prevent building in the first place and to try to limit growth by using the ‘not in my backyard’ argument. We are starting to see that change.”
Now, however, the landscape is starting to change. As the economy continues its shift away from heavy industry to services, and as gasoline breaks through the $4 (€2.54) a gallon mark, policymakers, developers, real estate investors and the public are beginning to question the future direction of zoning laws in the US. Many are wondering whether there is a smarter way to design towns and cities in the US to ensure people live, work and play in the same area. They are asking, in essence, whether the Euclidian barnyard shouldn't actually be located next door to the parlor instead.
Call it what you will – high-density planning, smart growth, mixed-use, clustering – this development is presenting a major investment opportunity for private equity real estate firms as authorities start to strike down the segregations of yesteryear and embrace a new way of living.
“This shift in focus for zoning authorities is creating new opportunities,” says Howard Schlesinger of New York-based private equity real estate and development firm Meridian Development Partners.
The traditional role of zoning in the US, according to Greg Vilkin, managing principal and president of MacFarlane Partners, has been about trying to “stop buildings from going up, to prevent building in the first place and to try to limit growth by using the ‘not in my backyard’ argument.” That, however, is now starting to change as increasing numbers of planners start to demand smarter growth and greater density to prevent sprawl. “People now recognize that, in urban areas, density doesn't mean pollution and traffic but can actually take people out of their cars,” Vilkin says.
Smart growth is primarily about allowing people to live closer to where they work and play: a fact that maybe taken for granted in a place such as Manhattan, but which rarely happens outside of New York City. According to the 2006 American Community Survey, the latest data available, 76 percent of workers in the US drove to work alone in their cars. Less than five percent used public transportation and more than a third of the 250,000 households surveyed spent between 20 to 35 minutes travelling to work. Just 0.5 percent used bicycles to get to and from work. Now with gas prices showing little sign of decreasing, public appetite for driving long distances is diminishing.
Tom Murphy, former mayor of Pittsburg between 1994 and 2006 and a senior resident fellow for urban development at the Urban Land Institute, says the “green” revolution of the past two decades had already started to focus peoples' attentions on the need for a change in zoning rules and how communities were developed. Typically, he said, US zoning laws – which are governed by each individual authority from state to city, municipality and even down to local grass roots level and so are extremely fragmented in nature – had the “suburbs in mind” where the car was not only king, but critical for any kind of quality of life. The question, he says, was how to persuade the public to change their behavior dramatically enough that it could spearhead a fundamental shift in public policy. “In the recent past that was always the question of how change is encouraged, but gas prices are doing that work for us,” he adds. “You are beginning to see that people don't want to live way out in the suburbs and drive 40 miles to work and 40 miles back again. As gas prices go up so people are changing their lifestyle habits. They are buying smaller cars and as the price of gas continues to go up it will affect the places where people choose to live.”
Getting snug in Sacramento
Renowned for tomatoes, grapes and wine, the Sacramento region is one area in the US actively changing its zoning laws in ensure increased smart growth development, and less urban sprawl.
The Sacramento blueprint adopted in 2004 by the six counties of El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba as well as 22 cities in the region may not be binding, but its strategy for development over the next 50 years is helping to change attitudes towards real estate in that part of California.
According to the blueprint, smart growth could protect around 360 square miles of land from urban development and reduce the number of large-lot single family houses from an expected 80 percent by 2050 to just 31 percent. The plan would also see brownfield redevelopment as a crucial component, with 13 percent of all housing and 10 percent of future jobs created through the reuse and redevelopment of existing real estate. And it's already heralding some success, according to the Sacramento Area Council of Governments (SACOG), which spearheaded the blueprint. The latest figures reveal that density in new residential projects has increased in the four years since the plan was adopted, with 67 percent of all units for sale or under construction in 2007 being small lot properties or attached homes compared to 33 percent large lot homes. In 2004, when the plan was approved, that figure was 34 percent for small lot/ attached homes and 61 percent for large lot homes. If the region hadn't adopted a smart growth plan that figure was projected to be just 20 percent for small lot/attached homes compared to 80 percent large lot properties by 2050.
Tom Cosgrove, board chairman of SACOG, says smart growth is a phenomenon taking hold of authorities around the US although, he adds, it is sometimes policymakers who have to persuade real estate developers and investors of the benefits of such a change. “It's a matter of moving people out of their comfort zones and getting them to do things they're perhaps not used to doing. But when it does take place and smart growth is seen in action you can see the returns and economic benefits are there – for all sides.”
Europeanization
Smart growth however is not merely a response to the current price of oil. It has steadily been growing as a trend within the US zoning framework for the past decade. It is in part a consequence of the desire to lead greener lives, as Murphy states, but also a response to the changing demographics of the US.
The face of the US is now very much represented by the baby-boom generation and their children, the boomers and echo-boomers, according to Vilkin. “If you look at young professionals in their 20s and then compare them with the empty-nesters, those in their 50s, and you then look at their spending patterns they are almost identical,” he says. “They don't have children. They don't worry about school. They're driven by lifestyle choices and activities, and they want to have choice. These are the two largest demographics in the US.” In the 1950s, 1960s and 1970s, when zoning was very much about separating residential development from commercial and industrial uses, people voted with their feet for suburban shopping centers and sprawl, Vilkin points out. “Demographics are shifting to the side of smart growth,” he adds. The high price of oil has just brought the issue into much sharper focus.
Together these three factors – the green, sustainability agenda, demographics and oil – are driving the American Dream of a detached house, with a front and back yard and car in the driveway out of the suburbs and increasingly into urban areas, often with public transportation as the main means of commuting to and from work.
Indeed for Vilkin, transportation is key to the success of high-density neighborhoods. Last year, San Francisco-based MacFarlane announced a $7 billion joint venture with The JBG Companies and Morgan Stanley Real Estate to develop 42 separate sites in Washington DC and its suburbs in Maryland and northern Virginia. The portfolio – due to be completed by 2013 – will see the development or renovation of 8.6 million square feet of office space, 2.4 million square feet of retail space, 2,500 hotel rooms and 13,000 multifamily residential properties. Approximately two-thirds of the development sites are located next to or near transit stations along Washington DC's Metro rail system. “The idea is about walking to the transit system,” Vilkin says. “Density has to be focused around transit nodes if it's to work successfully.”
Something echoed by Schlesinger: “The trend in development is to create walkable communities where people can live, work, shop and play. An additional driver is the growth of transit-oriented development, where the mix of uses is centered around rail and other public transportation hubs.”
Meridian is currently developing the site of a former Pennsylvania House furniture plant in Lewisburg, Pennsylvania. The factory – taken over by US furniture chain La-Z-Boy in 2000 – closed down in 2004 with the loss of more than 400 jobs. Schlesinger says that as the US economy turns increasingly from heavy industrial uses to more service-related industries, local governments are faced with the challenge of finding alternative uses for these former industrial sites. Zoning is a tool that is allowing policymakers, developers, investors and communities to facilitate those changes. “There is a major effort throughout the country to transform the way zoning is understood and implemented. Zoning innovations are facilitating this effort by focusing on what you can do, rather than what you can't.”
“Zoning innovations are facilitating [smart growth] by focusing on what you can do, rather than what you can't.”
In redeveloping Penn House Commons into a mixed-use residential, retail and light industrial complex, Meridian worked closely with zoning authorities and the local community before eventually arriving at a plan for the 42 acre site. Schlesinger says the first step was discussing their vision for the former factory with the local township before formulating a concept for the property and starting the formal approval process. In the case of Penn House Commons, Meridian plans to demolish a majority of the 650,000 square feet of existing warehouse and industrial property on the site and replace it with mixed-use facilities including 100,000 square feet of retail space, around 200 multifamily units and upwards of 150,000 square feet of office and light industrial use. At least one quarter of the site will be reserved for green open space. The private equity real estate and development firm says it chose the site for its location and surrounding infrastructure, such as schools, universities and hospitals. Meridian is now in the final stages of gaining approval via a neighborhood development ordinance, which will allow for greater density at Penn House and in the surrounding area. The process, Schlesinger says, will have taken about a year to complete. “It is about building consensus. As economies shift, so too will the way we live, work and play.”
Sacramento, California is another region where smart growth is also being developed as a zoning tool to produce denser, more clustered communities where there is less reliance on the car, and greater emphasis on placing homes nearer to where people work and play. Four years ago, the six-county region (all with their own independent zoning commissions and departments) adopted a growth plan that designated some areas for development while concentrating growth more densely in others. The region's local governments are not compelled to follow the Blueprint, which runs through to 2050, but the general thrust of increasing density in mixed- use developments appears to be working. According to a report in the Wall Street Journal, between 2004 and 2007, the number of projects with apartments, condominiums and town houses for sale in the region increased by 533 percent, while the number of subdivisions with homes on lots bigger than 5,500 square feet fell by 21 percent. At the time the Blueprint was adopted, public approval ratings for the project stood at 80 percent.
It is almost, Murphy states, a Europeanization of key US cities where there are extremely dense city centers with villages on the outskirts linked to the core via good public transportation systems. “Zoning in the future will reflect these changes that are taking place and it will look increasingly European-like,” he says.
Time is of the essence
But, as with all issues related to planning, zoning and entitlement, it takes time. Over the past decade, the amount of time spent in dealing with authorities has increased dramatically so much so that private equity real estate firms and developers now face an entitlement process of up to five years for major development projects that may have the potential for impact on a region or county's general master plan. “The entitlement process has definitely got longer over the past 10 years,” says Sid Dunmore, principal of Sacramento-based private equity firm Dunmore Capital.
Set up in 2005, Dunmore targets unentitled land in northern and central California counties, with the intention of acquiring, entitling and reselling the land to public homebuilders. Dunmore says the firm can deal with upward of 50 different counties and more than 100 city governments in the course of zoning land for development, all of which have individual policies and programs for addressing land use and long-term development objectives and most of which have their own supervisory and planning commission boards. That doesn't even include the need to deal with other government agencies including schools, police, fire, wildlife, fisheries and gaming and FEMA, the US Federal Emergency Management Agency.
US zoning is an extremely fragmented affair – indeed Houston, Texas has no zoning laws at all. But more often than not, private equity real estate firms will be faced with a deluge of zoning regulations and requirements, particularly if they have a multiple-city, county and state redevelopment strategy. In the course of gaining the necessary permits to redevelop Penn House Commons, Meridian says it always had a contingency plan in place to develop the site in accordance with th existing zoning.
During his previous role as president of Forest City Residential West and Forest City Stapleton, Vilkin spearheaded the redevelopment of the old Stapleton International Airport in Denver into a “smart growth” community comprising 4,700 acres, more than 12,000 homes and 10 million square feet of commercial and retail space. A spokesman for Forest City Stapleton said the ethos of the project was about creating a “community” where it was possible to “shop and walk without adding to air pollution, it's about the quality of the environment.” The scheme – which broke ground in 2001, six years after the airport closed down – took the co-operation of state, county and local government agencies, Vilkin adds, to get the necessary zoning permits. There is, he adds, a need for a regional vision when it comes to large-scale smart growth developments.
But as in Sacramento, this is happening in parts areas of the US. San Francisco's Mission Bay development project, set up in 1998, was formerly the railyard of the Southern Pacific Railroad Company and covered 303 acres of land between San Francisco Bay and Interstate 280. The project today boasts the headquarters of the California Institute for Regenerative Medicine; the research campus of the University of California, San Francisco; the northern terminus of the Third Street Light Rail Project of the San Francisco Municipal Railway; the northern terminus of Caltrain, the commuter train service running between San Jose and San Francisco; the first branch of the San Francisco Public Library in more than 40 years and around 6,000 housing units and six million square feet of office space.
“It seems counter-intuitive, but you have to ask whether there is a connection between quality of life and density. People think density is about cars, traffic and congestion,” Vilkin says. “That's not necessarily the case.” The US is too diverse a country for density and smart growth to become a wholesale national trend, but it will become increasingly prevalent in many of the US' urban centers. Vilkin continues: “We have crossed the tipping point. Living patterns have now started to change and some cities are adapting very quickly.”
FUNDS IN MARKET/COMING TO MARKET
FUND | FIRM | HEADQUARTERS | STRATEGY | TARGET (M) |
Global funds | ||||
Beacon Capital Strategic Partners VI | Beacon Capital Partners | Boston | Europe/US office | $6,000 |
Brookfield Real Estate Opportunity II | Brookfield Asset Management | Toronto | Global diversified | $1,000 |
Cerberus Real Estate II | Cerberus Real Estate Capital Management | New York | Global diversified | $2,000-$3,000 |
DLJ Real Estate Partners IV | Credit Suisse | New York | Global diversified | $2,000 |
Dune Real Estate Partners II | Dune Real Estate Partners | New York | Global diversified | $1,250 |
GDP Global Real Estate Opportunity Fund | GDP Global Fund Managers | New York | Global diversified | $1,000 |
Lehman Brothers Real Estate Partners III | Lehman Brothers | New York | Global diversified | $3,000 |
MSREF VII | International Morgan Stanley Real Estate | New York | Global diversified | $12,000 |
Perella Weinberg Partners Real Estate Fund II | Perella Weinberg Partners | New York | Global diversified | €1,600 |
Starwood Global Opportunity Fund VIII | Starwood Capital | Greenwich (CT) | Global diversified | $1,500 |
Walton Street Real Estate Fund VI | Walton Street Capital | Chicago | Global diversified | $2,500 |
Global funds subtotal | $36,602 | |||
Americas funds | ||||
Arden Real Estate Fund I | Arden Group | Philadelphia | US diversified | $125 |
Arsenal Real Estate Fund II | Arsenal Real Estate Funds | New Jersey | US diversified | $250 |
Avenue Real Estate Fund | Avenue Capital | New York | US distressed | $300 |
Berkshire Multifamily Value Fund II | Berkshire Property Advisors | Boston | US multi-family | $600 |
Black Creek Mexico Residential Fund | Black Creek Group | Denver | Mexico diversified | $500 |
Broadway Real Estate Partners Fund III | Broadway Partners | New York | US office | $1,000 |
Capri Urban Investors | Capri Capital Partners | Chicago | US urban diversified | $1,200 |
CIM Urban Real Estate Fund III | CIM Group | Los Angeles | California diversified | $750 |
Clarion Development Ventures III | ING Clarion Partners | New York | US development | $350 |
Colony Realty Partners III | Colony Capital | Los Angeles | Global diversified | $1,000 |
Concierge Apartment Fund | Concierge Asset Managment | Tiburon (CA) | US multi-family | $250 |
Cornerstone Apartment Ventures III | Cornerstone Real Estate Advisors | Hartford (CT) | US residential | $400 |
Cornerstone Hotel Income & Equity Fund II | Cornerstone Real Estate Advisors | Hartford (CT) | US hospitality | $600 |
Coventry Real Estate Fund III | Coventry Real Estate Advisors | New York | US retail | $400 |
CREF IV | Calare Properties | Hudson (MA) | US northeast diversified | $30 |
N/A | Crescent Hotels and Resorts | Fairfax (VA) | US hospitality | $350 |
Crocker Partners IV | Crocker Partners | Boca Raton (FL) | US diversified | $250 |
Cronus Capital Fund I | Cronus Capital | New York | US diversified | $200 |
Crown Capital Opportunities Fund | Crown Capital | St. Louis | US diversified | $200 |
Cypress Realty Fund VI | Cypress Real Estate Advisors | Austin (TX) | US diversified | $425 |
Dunmore Capital Fund | Dunmore Capital | Sacramento (CA) | California development | $200 |
Embarcadero Capital Partners Fund II | Embarcadero Capital | San Francisco | US office | $400 |
Equastone Value Fund III | Equastone Real Estate Investment Advisors | San Diego | US diversified | $350 |
Fidelity Real Estate Growth Fund III | Fidelity | Boston | US diversified | $750 |
Fremont Strategic Property Partners III | Fremont Realty Capital | San Francisco | US diversified | $750 |
Greater Washington Life Sciences Fund | JBG Companies/Scheer Partners | Chevy Chase/Rockville (MD) | US life sciences | $100 |
Grosvenor New York Multifamily Fund | Grosvenor US | Philadelphia | US residential | $400 |
Guardian Realty Fund III | Guardian Realty Investors | Bethesda (MD) | Mid-Atlantic diversified | $500 |
Hanover Real Estate Pertners III | Hanover Financial | Los Angeles | Western US diversified | $250 |
Hearthstone Path of Growth II | Hearthstone Advisors | San Rafael (CA) | US development | $500 |
House Investment RE Opportunities Fund IV | House Investments | Indianapolis | US development | $30 |
Hunter Chase Real Estate Opportunity Fund | Hunter Chase | Irving (TX) | US diversified | $250 |
Invesco Real Estate Fund III | Invesco Real Estate | Dallas | US diversified | $500 |
Jamestown Coinvest IV | Jamestown Properties | Atlanta | Southeast US diversified | $500 |
JBC Opportunity Fund III | John Buck Co. | Chicago | US diversified | $300 |
KBS Best Property Fund II | KBS Realty Advisors | Newport Beach (CA) | US diversified | $500 |
Kelly Capital Real Estate Special Situation Fund | Kelly Capital | San Diego | US diversified | $100 |
Kimpton Hospitality Partners II | Kimpton Hotel | San Francisco | US hospitality | $300 |
KMF Senior Housing Investors Fund | KMF Senior Housing Investors | Chicago | US senior housing | $250 |
LaSalle Canada Income & Growth Fund II | LaSalle Investment Management | Chicago | Canada diversified | $350 |
LaSalle Medical Office Fund II | LaSalle Investment Management | Chicago | US medical office | $350 |
LaSalle Mexico Fund | LaSalle Investment Management | Chicago | Mexico diversified | $500 |
LBA Realty Fund III | LBA Realty | Irvine (CA) | US office/industrial | N/A |
Lazard Freres Strategic Realty Investors III | Lazard Freres & Co. | New York | US healthcare | $500 |
Lexin AmTrust Real Estate Partners II | Lexin Capital | New York | US residential | $150 |
Los Angeles Development Partners | Chadwick Saylor | Los Angeles | Southern California urban | $150 |
Lubert-Adler Real Estate Fund VI | Lubert-Adler | Philadelphia | North America diversified | $2,600 |
Macfarlan Special Situations Fund | Macfarlan Capital Partners | Dallas | US distress | $300 |
MacFarlane Urban Real Estate Fund III | MacFarlane Partners | San Francisco | US urban diversified | $1,500 |
Meridian Real Estate Partners Fund III | Meridian Development Partners | New York | US distressed | $100 |
MGRA Genesis Real Estate Fund | Mayfield Gentry Realty | Detroit | US diversified | $150 |
Miller Global Fund V | Miller Global Properties | Denver | US diversified | $400 |
Urban Strategy America Fund | New Boston Fund | Boston | US urban redevelopment | $200 |
O'Conner North American Property Partners | O'Conner Capital Partners | New York | North American diversified | $750 |
Palisades Distressed/Value-Added Fund | Palisades Financial | Englewood Cliffs (NJ) | US diversified | $200 |
Genesis Workforce Housing Fund | Phoenix Realty | New York | Los Angeles residential | $175 |
Metropolitan Workforce Housing Fund | Phoenix Reality | New York | US residential | $250 |
N/A | The Carlyle Group | Washington DC | Latin America diversified | $400 – $600 |
Paladin Realty Latin America Investors III | Paladin Realty | Los Angeles | Latin America diversified | $500 – $800 |
PRP II | Perseus Realty Partners | Washington, DC | US diversified | $200 – $250 |
Praedium Fund VII | Praedium Group | New York | US diversified | $700 |
PLA Industrial Fund II | Prudential Real Estate Investors | Parsippany (NJ) | Mexico industrial | $140 |
PLA Residential Fund II | Prudential Real Estate Investors | Parsippany (NJ) | Mexico residential | $400 |
PLA Residential Fund III | Prudential Real Estate Investors | Parsippany (NJ) | Latin America residential | $1,000 |
Prudential Senior Housing Partners III | Prudential Real Estate Investors | Parsippany (NJ) | US senior housing | $300 |
RCG Longview Equity Fund | Ramius Capital Group | New York | US diversified | $300 |
Sarofim Multifamily Fund I | Sarofim Realty Advisors | Dallas | US residential | $150 |
Sentinel Realty Partners VII | Sentinel Real Estate Corporation | New York | US diversified | $200 |
Somera Realty Value Fund II | Somera Capital | Santa Barbara (CA) | US diversified | $300 |
Square Mile Fund I | Square Mile Capital Management | Greenwich (CT) | US distressed | $300 |
Stockbridge Real Estate Fund III | Stockbridge Capital Partners | San Mateo (CA) | US diversified | $3,000 |
Strategic Office Fund I | NNN Realty Advisors | Santa Ana (CA) | US net-leased office/retail | $250 |
Strategic Partners Value Enhancement Fund II | Strategic Capital Partners | Chicago | US diversified | $400 – $500 |
Stratford Lane Fund III | The Stratford Company | Tacoma (WA) | US land | $300 |
TA Associates Realty Fund VIII | TA Associates | Boston | US diversified | $900 |
TA Associates IX | TA Associates | Boston | US diversified | $1,750 |
Tishman Speyer Real Estate Venture VII | Tishman Speyer | New York | US diversified | $2,000 |
Thor Urban Retail Fund II | Thor Equities | New York | US retail | $500 |
Urban American Real Estate Fund II | Urban American | New Jersey | US residential | $200 |
Walton Street Mexico Fund I | Walton Street Capital | Chicago | Latin America diversified | $350 |
Americas funds subtotal | $39,675 |
FUNDS IN MARKET/COMING TO MARKET
FUND | FIRM | HEADQUARTERS | STRATEGY | TARGET (M) |
Europe funds | ||||
Aberdeen Property Fund Russia | Aberdeen Property Investors | Stockholm | Russia diversified | €250 |
Blackstone Real Estate Partners Europe III | The Blackstone Group | New York | Europe diversified | €3,000 |
Capmark UK Realty Partners Fund | Capmark Financial | Horsham (PA) | UK diversified | €250 |
N/A | Catalyst Capital | London | Europe diversified | €500 |
Columbus UK Real Estate Fund | Schroder Property Investment | London | UK diversified | £250 |
Cordea Savills Turkish Property Ventures Fund | Cordea Savills | London | Turkey diversified | € 400 |
Corestate German Commercial Properties | Corestate Capital | Zurich | German commercial | €500 |
East Capital Russian Property Fund | East Capital Private Equity | Stockholm | Russia diversified | €200 |
Elgin Capital Fund | Elgin Capital | Dublin | Berlin residential | €60 |
Emerging Property Fund II | Global Finance | Athens | Southest Europe diversified | € 350 |
Endurance Health Care | Orco Property Group | Luxembourg | Europe healthcare | €150 |
Endurance Logistics and Light Industrial | Orco Property Group | Luxembourg | Europe industrial | €150 |
Endurance Office II | Orco Property Group | Luxembourg | Europe industrial | €200 |
EPI Healthcare 1 | EVLI Bank | Helsinki | Finnish Healthcare | €60 |
European Continental RE Fund | Clearbrook Capital Partners | London | Europe diversified | £1,000 |
European Ventures Fund III | LaSalle Investment Management | Chicago | Europe diversified | $1,250 |
Forum European Realty Income III | Forum Partners | Greenwich (CT) | Europe diversified | $750 |
GED Real Estate Eastern Investments | GED | Spain | Europe diversified | €100 – €150 |
German Aktiv Property Fund | Teesland iOG | London | German diversified | €370 |
Global Property Fund | Global Finance | Athens | Balkan development | $150 – $200 |
Heitman European Industrial Property Partners | Heitman | Chicago | Europe industrial | €200 – €300 |
Heitman European Property Partners IV | Heitman | Chicago | Europe diversified | €500 – €750 |
Hexagone | Morley/DTZ | London | French diversified | € 210 |
Meyer Bergman European Retail Partners | Meyer Bergman | London | Europe retail | € 600 |
MIL Equity Partners | EquityInvest | Boston | Central/Eastern Europe diversified | $100 |
Moor Park Real Estate Fund | Moor Park Capital | London | Europe diversified | €1,200 |
Mosiac Central and Eastern European II | Mosaic Property | London | Central/Eastern Europe diversified | €200 |
Nordic Retail Fund | Protego Real Estate Investors | London | Nordic retail | €215 |
Orion European Real Estate Fund III | Orion Capital Partners | London | Pan-Europe diversified | € 1,000 |
PIK Real Estate Fund | PIK Group | Moscow | Russia diversified | $1,000 |
Realstar European Capital I | Realstar Group | Toronto | Europe alternative sectors | €300 |
Schroder Italian Property Fund II | Schroder Property Investment | London | Italy diversified | €250 – €350 |
The Sava Fund | Chayton Capital | London | Southest Europe diversified | €150 |
UK Property Ventures No. 1 Fund | Cordea Savills | London | UK diversified | £200 |
Valad Opportunity Fund II | Valad Property Group | Sydney | UK diversified | £250 – £400 |
Europe funds subtotal | $24,235 | |||
Asia/RoW funds | ||||
N/A | Actis Advisors | Mumbai | India diversified | $250 – $300 |
Aetos Capital Asia Fund III | Aetos Capital | New York | Asia diversified | $2,500 |
AEW Value Investors Asia | AEW | Singapore | Asia diversified | $350 |
AG Asia Realty Fund | Angelo Gordon | New York | Asia diversified | $300 |
Anand Rathi Realty Fund | Anand Rathi | Mumbai | India diversified | $115 |
Appian Indian Real Estate Portfolio | Appian | N/A | India diversified | $150 |
Asia Real Estate Opportunity Fund I | Standard Chartered/Istithmar | Singapore | Pan-Asia diversified | $750 |
Asia Value Fund | ING Real Estate Investment Management | Hong Kong | Asia diversified | $1,000 |
CapitaRetail China Development Fund II | CapitaLand | Singapore | China retail | $600 |
Catalyst Samsara India Opportunity Fund I | Catalyst Capital/Samsara Capital | London/Mumbai | India diversified | $130 |
China Opportunity Fund II | ING Real Estate Investment Management | Hong Kong | Greater China diversified | $750 |
CIMB-Mapletree Real Estate Fund 2 | CIMB Real Estate/Mapletree Capital | Malaysia/Singapore | SE Asia diversified | $290 |
Citigroup Property Investors Asia II | Citigroup Property Investors | New York | Asia diversified | $3,000 |
Horizon Realty Fund | Capitaland/Pantaloon Retail | Singapore/Mumbai | India retail | $350 |
Carlyle Santa Fey Real Estate Fund | The Carlyle Group | Washington DC | India diversified | $300 |
CIMB-Mapletree Real Estate Fund II | CIMB Group/ Mapletree Capital Man | Malaysia/Singapore | Asia diversified | $290 |
Cordea Nichani Indian Opportunities Number One | Cordea Savills | London | Indian development | $200 |
DHFL Venture Capital Fund II | Dewan Housing Finance | Mumbai | India residential | $200 |
Fortune Capital Holdings | PFH Investment Advisory | Mumbai | India hospitality | $200 |
N/A | Greenwich Group International | New York | India development | $1,000 |
HDFC Real Estate Venture Fund II | HDFC | Mumbai | India hospitality | $750 |
India Real Estate Opportunities Fund II | IREO | New York | India development | $400 |
Indiareit Indiareit Fund | Advisors (Piramal) | Mumbai | India development | $800 |
N/A | Indiareit | Mumbai | India diversified | $200 – $250 |
N/A | SHUAA Partners | Dubai | Saudi Arabia hospitality | $534 |
Kotak India Realty Fund | Kotak Realty Fund | Mumbai | India diversified | $350 |
Kshitij Venture Capital Fund | Pantaloon Retail/Dalmia Group | Mumbai | India retail | $60 |
LaSalle Asia Opportunity Fund III | LaSalle Investment | Chicago | Asia diversified | $1,000 |
LaSalle Japan Logistics Fund II | LaSalle Investment | Chicago | Asia logistics | $400 |
Leopard Cambodia Fund | Leopard Capital | Hong Kong | Cambodia diversified | $100 |
Lotus Hotel Investment Fund | Lotus Hotel Investment Fund | Hong Kong | Asian hotels | $1,000 |
Milestone Domestic Scheme II | Milestone Capital Advisors | Mumbai | India diversified | $250 |
New City Asia Partners | New City Capital | Tokyo | Asia diversified | $1,000 |
Pacific Alliance China Land Fund | Pacific Alliance Group | Hong Kong | China diversified | $400 |
Pradera China fund | Pradera Asset Management | London | China retail | $3,000 |
Protego Qudos Vietnam Property Fund | Protego Real Estate Investors | London | Vietnam residential | $200 |
Protego WIRE Indian Office Development Fund | Protego Real Estate Investors | London | Indian office | $150 |
Red Fort Real Estate India Fund II | Red Fort | New Delhi | India diversified | $795 |
Saffron Investment Advisors | Saffron Investment Advisors | Mumbai | India development | $500 |
SHUAA Hospitality Fund I | SHUAA Partners | Dubai | MENA hospitality | $200 |
Tano India Real Estate Fund | Tano Capital | San Mateo (CA) | India diversified | $100-$500 |
Tishman Speyer India Fund | Tishman Speyer/ICICI | New York | India diversified | $600 |
Tishman Speyer GSC China Fund | Tishman Speyer/GSC | New York | China diversified | $500 |
Trikona Trinity Capital | Trikona Capital | Grand Cayman | India development | $300 |
Triseas Korea Property Fund II | Doran Capital Partners | Seoul | Asia diversified | $600 |
Unitech International Realty Fund I | Unitech | New Delhi | India residential | $500 |
N/A | West University Capital | Houston | India diversified | $300 |
Asia/RoW funds subtotal | $29,894 | |||
Funds of funds | ||||
4IP European Real Estate Fund of Funds | Sal. Oppenheim | Zurich | Europe fund of funds | €300 |
AIPP Asia Select | Aberdeen Property Investors | Stockholm | Asia fund of funds | $600 |
Aberdeen Indirect Property Partners II | Aberdeen Property Investors | Stockholm | Europe fund of funds | € 600 |
Aberdeen Indirect Property Partners Active | Aberdeen Property Investors | Stockholm | Europe fund of funds | € 500 |
American Value Partners Fund I | American Value Partners | Los Angeles | US fund of funds | $400 |
Clerestory Small Cap Real Estate Fund I | Clerestory Capital Partners | New York | Global diversified | $600 |
Composition Capital Americas | Composition Capital Partners | Amsterdam | Americas fund of funds | $300 |
Composition Capital Asia II | Composition Capital Partners | Amsterdam | Asia fund of funds | $400 |
Composition Capital Europe II | Composition Capital Partners | Amsterdam | Europe fund of funds | €350 |
Continental European Fund II | Schroder Property Investment | London | Europe fund of funds | €250 |
Franklin Templeton Asian Real Estate Fund | Franklin Templeton Institutional | San Mateo (CA) | Asia fund of funds | $500 |
Franklin Templeton European Real Estate Fund of Funds 2 | Franklin Templeton Institutional | San Mateo (CA) | Europe fund of funds | € 300 |
Franklin Templeton Private Real Estate Fund | Franklin Templeton Institutional | San Mateo (CA) | International fund of funds | $300 |
Franklin International Real Estate Fund 3 | Franklin Templeton Institutional | San Mateo (CA) | Global fund of funds | $300 |
Goldman Sachs Real Estate Partners | Goldman Sachs | New York | Global fund of funds | $1,000 |
Goodman Eurozone Fund of Funds II | Aberdeen Property Investors | Stockholm | Europe fund of funds | € 500 |
Landmark Real Estate Fund of Funds | Landmark Partners | Simsbury (CT) | Global fund of funds | $250 |
Madison Harbor Private Real Estate Partners | Madison Harbor Capital | New York | Global fund of funds | $400 |
Metropolitan Real Estate Partners V | Metropolitan Real Estate | New York | US fund of funds | $250 |
Metropolitan Real Estate Partners | Int'l II Metropolitan Real Estate | New York | Europe fund of funds | $200 |
Newlin Realty Partners | Newlin Capital Partners | Princeton (NJ) | Global fund of funds | $130 |
Penn Square Global Real Estate Fund II | Penn Square Capital | Radnor (PA) | Global fund of funds | $300 |
Portfolio Advisors Real Estate Fund III | Portfolio Advisors | Connecticut | Global fund of funds | $300 |
Funds of funds subtotal | $9,979 | |||
TOTAL TARGETED | $140,384 |
FUNDS CLOSED IN 2008
FUND | FIRM | HEADQUARTERS | STRATEGY | CLOSE | TARGET (M) | CLOSED (M) | DATE |
Global funds | |||||||
Blackstone Real Estate Partners VI | The Blackstone Group | New York | Global diversified | Final | N/A | $900 | Apr-08 |
Equity International Fund IV | Equity International Properties | Chicago | Global diversified | Final | N/A | $500 | Feb-08 |
Northwood Real Estate Partners I | Northwood Investors | Greenwich (CT) | Global diversified | Final | $1,250 | $1,250 | Jul-08 |
Rockpoint Real Estate Fund III | Rockpoint Group | San Francisco | Global diversified | Final | N/A | $2,500 | Apr-08 |
Westbrook Real Estate Fund VIII | Westbrook Real Estate Partners | New York | Global diversified | Final | N/A | $2,500 | Feb-08 |
WCP II | Westport Capital Partners | Westport (CT) | Global diversified | First | $500 | $200 | May-08 |
Whitehall Street International 2008 | Goldman Sachs | New York | Global diversified | Final | N/A | $2,343 | Jun-08 |
Global funds subtotal | $10,193 | ||||||
Americas funds | |||||||
AG Realty Fund VII | Angelo Gordon | New York | US diversified | Final | $1,250 | $1,250 | Apr-08 |
Apollo Domestic Emerging Markets Fund | Apollo Real Estate Advisors | New York | US diversified | First | $525 | $420 | May-08 |
Apollo Value Enhancement Fund VII | Apollo Real Estate Advisors | New York | US diversified | Final | N/A | $758 | Jul-08 |
BlackRock Retail Opportunity Fund | BlackRock | New York | US retail/mixed-use | Final | N/A | $503 | Feb-08 |
Canyon Johnson Urban Fund III | Canyon Johnson | Los Angeles | US urban diversified | Final | N/A | $1,000 | Apr-08 |
Richard Ellis | Richard Ellis | Los Angeles | US diversified | Final | N/A | $2,100 | May-08 |
DRA Growth & Income VI | DRA Advisors | New York | US diversified | Final | N/A | $1,250 | Mar-08 |
Exeter Industrial Value Fund | Exeter Property Group | US industrial | N/A | N/A | $357 | Jan-08 | |
FIP Prosperitas II | Prosperitas | Sao Paolo | Brazil diversified | Final | N/A | $600 | Apr-08 |
Harrison Street Real Estate Partners II | Harrison Street Real Estate Capital | Chicago | US diversified | Second | $300 | $240 | Jun-08 |
Intercontinental Fund IV | Intercontinental Real Estate Corporation | Boston | US diversified | Final | $250 | $200 | Jun-08 |
JER Real Estate Partners IV | JER Partners | McLean (VA) | US diversified | Final | $1,250 | $772 | Mar-08 |
LaSalle Income and Growth Fund V | LaSalle Investment Management | Chicago | US diversified | Final | N/A | $728 | Jun-08 |
Phillips Edison Fund IV | Phillips Edison | Cincinnati | US retail/distressed | First | $500 | $145 | Jan-08 |
RLJ Real Estate Fund III | RLJ Development | Maryland | US/Canada | Final | N/A | $1,200 | Jan-08 |
Savanna Real Estate Fund I | Savanna Investment Management | New York | US diversified | Final | N/A | $313 | Feb-08 |
Urdang Value-Added Fund II | Urdang Capital Management | Plymouth Meeting (PA) | US diversified | Final | N/A | $463 | Feb-08 |
Vinum Capital Partners I | Vinum Capital Management | California | US wineries | Final | N/A | $250 | May-08 |
Western National Realty Fund II | Western National Group | California | US multifamily | First | $300 | $200 | Feb-08 |
Williams Opportunity Fund | Williams Realty Advisors | Atlanta | US diversified | Final | $120 | $104 | Mar-08 |
Americas funds subtotal | $12,853 | ||||||
Europe funds | |||||||
Apollo European Real Estate III | Apollo Real Estate Advisors | New York | Europe diversified | Final | N/A | $1,400 | Mar-08 |
Carlyle Europe Real Estate Parnters III | The Carlyle Group | Washington DC | Europe diversified | Final | N/A | € 2,200 | Jun-08 |
Catalyst European Property Fund | Catalyst Capital | London | Europe diversified | Second | €400 | €168 | May-08 |
Corestate German Residential Limited | Corestate Capital | Zurich | German residential | Final | N/A | €486 | May-08 |
Emerging Europe Fund | Europa Capital Partners | London | Eastern Europe | Final | N/A | € 150 | Jun-08 |
Europa Fund III | Europa Capital Partners | London | Western and Central Europe diversified | Final | N/A | € 600 | Jun-08 |
EPI Special Opportunities | Curzon Global Partners/AEW Europe | London/Paris | Pan-European diversified | Final | N/A | €800 | May-08 |
European Strategic Real Estate Fund | Quinlan Private | Dublin | Europe diversified | Final | N/A | € 400 | May-08 |
Italian Opportunities II | Cordea Savills | London | Italy diversified | Final | €300 | €360 | Jan-08 |
MGPA Europe Fund III | MGPA | London | Europe diversified | Final | N/A | $1,300 | Jun-08 |
Moorfield Real Estate Fund II | Moorfield Group | London | UK diversified | Final | N/A | £400 | Feb-08 |
Niam Fund IV | Niam AB | Stockholm | Nordic and Baltics diversified | Final | N/A | €700 | Jan-08 |
Resolution Real Estate III | Resolution Property | London | UK and Europe diversified | Final | N/A | €800 | Jan-08 |
Rockspring TransEuropean Property IV | Rockspring Property Inv Managers | London | EU diversified | Final | €275 | €600 | Mar-08 |
Europe funds subtotal | $14,123 | ||||||
Asia/RoW funds | |||||||
ARA Asia Dragon Fund | ARA Asset Management | Hong Kong | Asia diversified | Final | $1,500 | $1,130 | Jun-08 |
Citic CapitaLand Business Park Fund | CapitaLand/CITIC Trust | Singapore/China | China office | Final | N/A | $73 | Jun-08 |
JP Morgan Greater China Property Fund | JP Morgan Asset Management | New York | Greater China diversified | Final | N/A | $600 | May-08 |
MGPA Asia Fund III | MGPA | London | Asia diversified | Final | N/A | $3,900 | Jun-08 |
Strategic Partners Asia II | Richard Ellis Investors | Los Angeles | Asia diversified | Final | N/A | $400 | Feb-08 |
The Pearl Qatar Development Fund | United Development Company | Qatar | Qatar diversified | Final | $300 | $300 | Jan-08 |
Trophy Property Development Fund | Winnington Capital | Hong Kong | China diversified | Final | $750 | $1,050 | Apr-08 |
Asia/RoW funds subtotal | $7,453 | ||||||
Fund of funds | |||||||
HRJ Global Real Estate Fund III | HRJ Capital | San Francisco | Global fund of funds | Final | N/A | $155 | Mar-08 |
Penn Square Global Real Estate Fund I | Penn Square Capital | Radnor (PA) | Global fund of funds | Final | $100 | $231 | May-08 |
SVP Real Estate I | Sports Venture Partners | Chicago | Global fund of funds | Final | N/A | $32 | Mar-08 |
Fund of funds subtotal | $418 | ||||||
TOTAL | $45,039 |
The big boysFunds in market with targets of $2bn or more
FIRM | FUND STRATEGY | TARGET (M) |
Aetos Capital | Asia diversified | $2,500 |
Beacon Capital Partners | Europe/US office | $6,000 |
The Blackstone Group | Europe diversified | €3,000 |
Cerberus Real Estate Capital Management | Global diversified | $3,000 |
Citigroup Property Investors | Asia diversified | $3,000 |
Colony Capital | US distressed | $2,000 |
Credit Suisse | Global diversified | $2,000 |
LaSalle Investment Management | Asia diversified | $2,500 |
Lehman Brothers | Global diversified | $3,000 |
Lubert-Adler | US diversified | $2,600 |
Morgan Stanley Real Estate | Global diversified | $12,000 |
Pradera Asset Management | China retail | $3,000 |
Stockbridge Capital Partners | US diversified | $3,000 |
Tishman Speyer | US diversified | $2,000 |
Walton Street Capital | Global diversified | $2,500 |