The 2007 Private Equity Real Estate Review
The 2007 Private Equity
Real Estate Review
-Sample Pages
© 2007 Private Equity Intelligence Ltd
1
The 2007 Private Equity Real Estate Review
Contents:
1. Executive Summary
7
9. Overview of Fund Terms and Conditions
107
2. Real Estate Online
13
10. Fund Listings - Key Terms and Conditions
113
3. Overview of Fundraising Market
17
11. Overview of Universe of Real Estate Firms
123
4. Overview of Real Estate Fund of Funds Market
37
12. Real Estate Fund Performance
129
5. Review of Placement Agents
45
13. Real Estate Firm Preferences
139
6.
-
55
14. Real Estate Firm Profiles
157
15. Overview of Investors in Real Estate Funds
283
16. Profiles for Top 250 Investors in Real Estate
295
17. Index
- Index of General Partners
- Index of Limited Partners
439
7.
-
Listing of Funds Closed 2006 - 2007
European Funds Closed 2006-2007
North American Funds Closed 2006-2007
Rest of World Funds Closed 2006-2007
Listings of Funds on the Road
European Funds Closed 2006-2007
North American Funds Closed 2006-2007
Rest of World Funds Closed 2006-2007
81
8. Listings of Expected New Fund Launches
101
© 2007 Private Equity Intelligence Ltd
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The 2007 Private Equity Real Estate Review
Fig. A: Investors’ Current Real Estate Investment Status
Executive Summary
2%
3%
The growth experienced by the private equity real
estate industry over recent years is unparalleled in
23%
At or close to commitment
but investing opportunistically
the history of the asset class. From a niche sector in
have now grown in stature, and are currently second
At or close to target
commitment but investing to
maintain
only to buyout funds in terms of capital raised. 2006
Unfilled target commitment
the overall private equity universe, real estate funds
proved to be a record breaking year for real estate
72%
fundraising, with a total of 116 funds achieving final
Unlikely to consider
investments in next 2 years
closes, raising an aggregate $72bn in commitments.
This record looks set to be beaten again however, as
by August 2007 a total of $50bn had already been
raised over the first eight months of the year.
Review indicates that an overwhelming 78% of
median IRRs of private equity real estate funds have
Investor appetite for the asset class has been the
investors plan to increase their allocations to private
been excellent, varying between 8% and 12% for
driving force behind this growth, as existing investors
equity real estate in the medium to long term.
funds of vintages 1996-1999 and between 16% and
increase
Managers
be
26% for funds of vintages 2000 to 2004. These
continue to make their maiden investments. The
encouraged by figures indicating that 72% of existing
returns are amongst the best in the industry, with
average allocation to real estate amongst current
investors
target
median performance constantly exceeding the
investors is 4.6%, with the average target allocation
allocations, with only 3% unlikely to invest over the
Preqin All Private Equity Benchmark, also beating
to real estate a significant 1.1% higher at 5.7%. It is
next two years (fig. A).
the buyout performance for funds of all but two
their
allocations,
and
new
investors
raising
are
new
currently
vehicles
short
of
will
also
their
vintage years since 1998.
clear that there is potential for even greater growth
over the coming years; in fact a survey undertaken in
The forces driving this growth in investor appetite are
the course of gathering data for the Real Estate
clear: strong, steady performance. As Fig. B shows,
© 2007 Private Equity Intelligence Ltd
3
The 2007 Private Equity Real Estate Review
Fig. B: Median Net IRR, Real Estate vs. All Private Equity,
Buyout & Venture, Vintages 1995 - 2004
Fig. C: Growth in Real Estate Funds in Market,
January 2006 - August 2007
Net IRR Since Inception (%)
30
250
25
194
200
20
15
150
Number of Funds
on the Road
10
5
92
100
76
0
-5
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
50
Aggregate Target
of Funds on the
Road ($bn)
32.5
29
16
-10
0
Real Estate
All Private Equity
Buyout
Venture
January 2006
January 2007
August 2007
The dispersion of individual fund performance is
the future for the industry is certainly looking good.
average fund sizes continuing to grow, we expect
characterised
standard
Fund managers have responded to the high
2008 to match if not exceed the total raised in 2007.
deviation around the median, meaning that although
demand, and as fig. C shows, there are currently
We predict a further $80 - $100 billion to be raised
real estate funds are unlikely to produce the
more vehicles on the road than at any other point in
over the course of 2008 from a similar number of
incredible returns that the top performing venture
the history of the asset class. Quarterly fundraising
vehicles, with mega-sized funds accounting for a
and buyout have, real estate funds are relatively
has been steadily increasing, and with such an
significant proportion of this total.
unlikely to provide negative returns to their investors.
excellent stock of new vehicles on the road, and with
Only 5% of real estate funds raised over the past
investor appetite at a high level, we predict that 2007
However, although overall strong fundraising levels
twenty
will be another record breaking year.
are set to continue, conditions for managers raising
years
by
a
have
relatively
produced
small
negative
IRRs,
new vehicles are set to become more demanding in
comparing favourably with venture (39%) and buyout
(17%).
In terms of aggregate capital commitments, we
2008 and beyond.
predict that $75 - $85 billion will be raised by 90 With such a strong track record driving ever
100 funds at year end for 2007, and with an
The private equity real estate industry has grown
increasing investor enthusiasm for real estate funds,
increased level of funds in the market, and with
dramatically over the past three years, with strong
© 2007 Private Equity Intelligence Ltd
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The 2007 Private Equity Real Estate Review
and steady returns leading to high levels of investor
Fig. D: Ratio of Funds in Market vs. Funds Closed in Previous 12 Months
appetite and demand for new vehicles. Real estate
managers have been able to raise new vehicles at a
2
1.81
frenetic pace - In January 2006 the aggregate target
1.8
of funds on the road was $16 billion, but over the
1.6
course of the year a total of $72 billion was raised.
1.4
With so much demand for new vehicles fund
1.2
managers were able to gather commitments in
1
record time, and the stock of new vehicles on the
0.8
road, although healthy, was relatively low in
0.6
comparison with the huge levels of capital being
0.4
raised.
0.2
1.21
Ratio of Value of Funds in
Market vs. Funds Closed in
Previous 12 Months
0.66
0.45
0.26
Ratio of Number of Funds in
Market vs. Funds Closed in
Previous 12 Months
0.28
0
First time fund managers, who have traditionally
January 2006
January 2007
August 2007
found fundraising to be a demanding process have
enjoyed great success, with 28% of funds closed in
targeted fundraising.
manageable level, but does indicate that managers
may find it more difficult to gain the attention of
the period 2006 - August 2007 being raised by newly
investors in a more competitive market.
established firms. When this is compared with the
However, as fig. D shows, there is evidence that the
figure of 13% for the private equity industry as a
fundraising environment is beginning to change.
whole, it becomes clear just how buoyant the real
Whereas in the past the level of funds on the road
The appetite for new funds is still high, but with an
estate fundraising market has been. Managers of all
has represented only a few months of fund closes in
increased number of firms vying for investor’s
sizes and levels of experience have been able to
terms of aggregate fund value, there is now a much
attention and commitments, careful targeting of LPs
raise capital in an environment where the reasonably
greater level of competition in the market. The
and an effective marketing campaign will become
low stock of funds on the road has ensured that all
aggregate target value of the 194 funds in market
more important than ever in 2008 and beyond.
managers have been able to make themselves
currently stands at $92 billion, representing just over
heard, enabling them to achieve, if not exceed, their
one year’s worth of fund closes. This is still a
© 2007 Private Equity Intelligence Ltd
5
The 2007 Private Equity Real Estate Review
among institutional investors. Citigroup Property
Fig. 10: Fundraising by Firm Location
Partners' CPI Capital Partners Asia closed with
120
commitments worth $1.3 billion. This fund will make
investments
in
China,
India,
Japan,
Korea,
112
97.5
100
Singapore, Malaysia and Thailand. (Fig. 8)
No. Funds
Closed by GPs
in Region
80
Fundraising by GP location
60
In terms of firm location the majority of funds have
40
Aggregate
Commitments
($bn)
38
24
been raised by firms operating in North America. As
17
20
fig. 9 shows, funds managed by North American
6.4
0
firms account for 64% of all funds raised during the
North America
period 2006 - August 2007. European firms are the
Europe
Rest of World
second largest in terms of funds raised accounting
Fig. 11: Global Fundraising by Strategy
for 22% of the global total, while firms based in Asia
60%
and the Rest of World account for 14%.
51%
In terms of value, North American fund managers
dominance of the global market is even greater, with
funds raised by firms in this region accounting for an
aggregate $97.5 billion, 80% of all capital raised.
European managers account for $17 billion, 15% of
all capital raised, while managers based in Asia and
Percentage of Funds
50%
44%
40%
30%
20%
11%
9%
10%
6%
the Rest of the World raised $6.4 billion, 5% of total
0%
capital raised. (Fig. 10)
Core - Plus
Value Added
Oportunistic
Real Estate Fund
of Funds
Mezzanine
Fund Type
© 2007 Private Equity Intelligence Ltd
6
The 2007 Private Equity Real Estate Review
employed their services. 42% of funds currently on
Fig. 31: Effect of Firm Experience on Placement Agent Use
the road are using a placement agent, a further 5%
45%
increase.
The consistent growth seen in the proportion of
closed end real estate funds that use an outside firm
to aid in fundraising points not only towards the
increasingly competitive fundraising marketplace but
also to the ongoing significance of placement agents
in their role of helping fund managers to source and
secure capital commitments. Placement agents look
Proportion of Funds using
Placement Agent
40%
42%
35%
35%
30%
25%
20%
15%
10%
5%
set to become a progressively more important tool
0%
for fund managers as the private equity real estate
First-time Fund Managers
All Managers
industry continues to expand, particularly as it
becomes more established in markets outside of
Europe and North America.
In contrast, the level of experience of a private equity
Influence of Firm History
real estate manager has a relatively smaller effect on
Within other sectors of the private equity industry
the likelihood that the manager will use a placement
such as buyout and venture, the level of experience
agent. As fig. 31 shows, 35% of first-time real estate
A number of factors can be seen to affect the
a private equity fund manager possesses has a
fund
proportion of firms that use a placement agent. This
significant impact on the likelihood that a manager
comparison to 42% seen across real estate
includes the geographic focus of the fund, the size of
will use a placement agent, with a much lower
managers of all levels of experience.
the fund and the level of experience of the firm.
proportion of first-time fund managers using a third
Which Firms are using Placement Agents•
party
fundraising
service
experienced managers.
compared
to
more
managers
used
a
placement
agent
in
In contrast with the private equity industry as a
whole, where a large number of experienced
managers are raising their third fund or more, the
© 2007 Private Equity Intelligence Ltd
7
The 2007 Private Equity Real Estate Review
EUROPEAN FUNDS CLOSED 2006-2007
Fund Name / Firm Name
Aberdeen Indirect Property Partners
Target
Close
Final
Close
Close
Date
Placement
Agent
750 EUR
624 EUR
Feb-06
Not Used
160 USD
Jan-07
625 USD
Jan-07
625 USD
North America,
Global
Value Added
North America,
Europe
Value Added
North America,
West Europe
Value Added
Europe
Hatteras Investment Partners, Hewlett Packard Company
Pension Fund, LGT Capital Partners, North Carolina
Department of State Treasurer & State Teachers'
Retirement System of Ohio
Jun-06
Opportunistic
North America,
Global
Allstate Alternative Investments, New Jersey State
Investment Council, New York City Teachers’ Retirement
System, New York State Teachers' Retirement System &
Teacher Retirement System of Texas
150 GBP
Apr-06
Opportunistic
UK, West
Europe
150 EUR
Apr-07
Opportunistic
Finland, Europe Commercial,
Hotels,
Industrial,
Office &
Residential
1,000 USD
Jul-07
Value Added
France,
Germany, Italy,
West Europe
4,000 USD 4,000 USD
UBS
Investment
Bank Private
Equity Funds
Group
Aug-07
Beacon Capital Partners
Benson Elliot European Real Estate
Partners II
300 EUR
335 EUR
Aug-06
Probitas
Partners
Folksam & Nordea Liv
Retail
Pennsylvania Public School Employees' Retirement
System
Office
Benson Elliot Capital Management
Blackstone Real Estate Partners V
4,000 USD 5,250 USD
Blackstone Real Estate Group
Brockton Capital I
Brockton Capital
Capman Real Estate Fund II
150 EUR
Not Used
CapMan Real Estate
CB Richard Ellis Strategic Europe
Fund III
CB Richard Ellis Investors
© 2007 Private Equity Intelligence Ltd
Sample LPs
Value Added
Apollo Real Estate Advisors
Beacon Capital Strategic Partners V
Sector Focus
Europe
Angelo, Gordon & Co - Real Estate
Apollo Real Estate Finance
Corporation
Geographic
Focus
Core-Plus &
Fund of Funds
Aberdeen Property Investors
AG Net Lease Realty Fund
Strategy
Any
Industrial,
Office,
Residential &
Retail
California State Teachers' Retirement System,
Pennsylvania Public School Employees' Retirement
System, Pennsylvania State Employees' Retirement
System, Portfolio Advisors & Teachers' Retirement
System of the State of Illinois
Harel Insurance Investments
California State Teachers' Retirement System, Maryland
State Retirement & Pension System, New York State
Teachers' Retirement System, Ohio School Employees'
Retirement System & Teachers' Retirement System of the
State of Illinois
8
The 2007 Private Equity Real Estate Review
NORTH AMERICAN FUNDS IN MARKET
Fund Name / Firm Name
Target
Size (mn)
AG Core Plus Real Estate II
750 USD
Closings to Date /
Expected Closings
Placement
Agent
Strategy
Geographic Focus
Core-Plus
North America
Opportunistic
North America
Value Added
North America
Sector Focus
Angelo, Gordon & Co - Real Estate
AG Realty Fund VII
Angelo, Gordon & Co - Real Estate
Allegis Value Trust
300 USD
First Close: 200 USD (Sep-2006)
Not Used
Commercial, Hospitality, Hotels,
Industrial, Leisure/Entertainment,
Medical/Healthcare, Office,
Residential, Retail & Senior Home
UBS Realty Investors
American Value Partners I
400 USD
Fund of Funds, North America
Opportunistic &
Value Added
150 USD
Core-Plus
American Value Partners
APCA Property Fund II
North America
Ashforth Paradigm Capital Advisors
Apollo Domestic Emerging Markets
Fund
500 USD
JT Partners
North America
Apollo Real Estate Advisors
Bay Area Smart Growth Fund II
125 USD
North America
250 USD
Farrell Marsh & Opportunistic & North America
Co.
Value Added
Industrial, Office, Residential & Retail
Kennedy Wilson
BGF Real Estate Fund I
Bridge Investment Group
BlackRock Retail Fund
Multi-family & Residential
750 USD
Value Added
North America
Retail
10,000
USD
Opportunistic
North America, Global
Any
North America
Office & Residential
Value Added
North America
Office
Value Added
North America
Office, Residential & Retail
BlackRock Realty
Blackstone Real Estate Partners VI
Blackstone Real Estate Group
Boulder Net Lease II
150 USD
Boulder Net Lease Funds
Broadway Real Estate Fund III
1,000 USD
Triago
Broadway Real Estate Partners
Capmark Commercial Realty Partners 1,000 USD
III
Capmark Financial Group
© 2007 Private Equity Intelligence Ltd
9
The 2007 Private Equity Real Estate Review
Unlike most other types of private equity fund, real
Relatively few real estate funds offer rebates of
in
estate
consistent
monitoring and transaction fees back to LPs - only
management fee to larger LPs, with fees declining in
management fee throughout the life of the fund,
30% of the funds in our sample of funds had
bands above two or three size breaks. The largest
without any reductions to fees after the investment
provisions for this. This contrasts with other types of
LPs are typically charged around 65% the normal
period, as is generally the case with venture and
private equity fund, e.g. buyout funds, where such
level of management fee, although this can be as
buyout funds. 84% of the funds in our sample had no
rebates have become the norm.
low as 50%. There is wide variation in what
funds
generally
charge
a
our
sample
charged
a
reduced
rate
of
constitutes a 'large' LP, ranging from 'above $1
reduction in fees after the investment period. 9% of
funds charge the same percentage rate fee after the
Discounts for Larger LPs: another aspect of the
million' to as much as 'above $100 million',
investment period, but applied this to invested
terms and conditions of real estate funds that differs
depending upon the target investor base of the fund
capital as opposed to commitments; and 6% of funds
from the general private equity practice appears to
in question.
reduced the percentage rate charged.
be the special treatment afforded to larger LPs. For
most types of private equity fund (with the sole
exception of fund of funds), large LPs are treated to
all intents and purposes in the same way as smaller
LPs. In real estate, however, exactly half of the funds
Fig. 38: Management Fees by Strategy
Fig. 39: Real Estate Funds Management Fee vs. Fund Size
100%
2.00%
1.51%
1.50%
1.20%
Mean
1.00%
Median
0.80%
0.60%
0.40%
0.20%
0.00%
Percentage of Funds
Management Fee
1.71%
1.60%
1.40%
90%
1.88%
1.80%
80%
70%
60%
2.0% or more
1% to 1.99%
Below 1%
50%
40%
30%
20%
10%
0%
Opportunistic
Value-Added
Fund Type
© 2007 Private Equity Intelligence Ltd
Below $250 mn
$250 mn to $499 mn
$500 mn and Above
Fund Size ($mn)
10
The 2007 Private Equity Real Estate Review
Fund
Fund Type
Vintage
Fund size
(USD mn)
GP Region
Management Fee during
Investment Period
Mechanism for reduction postinvestment period
Reduced rate post-Investment
Period
Carried Interest
Basis
Fund
21
Opportunistic
2006
250 - 499
Middle East
2.00%
No change
2.00%
Whole Fund
Fund
22
Opportunistic
2006
250 - 499
US
2.00%
Fund
23
Opportunistic
2006
250 - 499
US
1.50%
Same rate, cost basis of unrealized portfolio
1.50%
Whole Fund
Fund
24
Opportunistic
2006
250 - 499
US
0.50%
Fund
25
Opportunistic
2005
250 - 499
US
Fund
26
Opportunistic
2005
250 - 499
US
1.50%
Fund
27
Opportunistic
2005
500 - 999
Europe
2.00%
Fund
28
Opportunistic
2006
500 - 999
US
0.50%
Fund
29
Opportunistic
2007
500 - 999
US
1.50%
Fund
30
Opportunistic
2006
500 - 999
Asia
2.00%
Fund
31
Opportunistic
2005
500 - 999
US
1.50%
Same rate, cost basis of unrealized portfolio
1.50%
Fund
32
Opportunistic
2006
500 - 999
US
1.50%
Same rate, cost basis of unrealized portfolio
1.50%
Fund
33
Opportunistic
2005
500 - 999
US
1.50%
Same rate, cost basis of unrealized portfolio
1.50%
Fund
34
Opportunistic
2006
1000 +
US
1.00%
Fund
35
Opportunistic
2006
1000 +
US
Fund
36
Opportunistic
2005
1000 +
US
1.50%
Deal by Deal
Fund
37
Value Added
2006
0 - 99
Middle East
2.00%
Whole Fund
Fund
38
Value Added
2006
100 - 249
Middle East
2.00%
Fund
39
Value Added
2003
100 - 249
US
2.00%
Fund
40
Value Added
2006
100 - 249
Europe
© 2007 Private Equity Intelligence Ltd
No change
Whole Fund
Whole Fund
Deal by Deal
Deal by Deal
Whole Fund
No change
Whole Fund
11
The 2007 Private Equity Real Estate Review
actually being most likely to be in the top quartile.
The most experienced managers have a reduced
possibility of appearing in the bottom quartile, but are
Fig. 55: Quartile Ranking by Fund Number
100%
90%
no more likely than less experienced firms to appear
80%
in the top quartile. The relatively low levels of
70%
correlation
and
60%
performance might provide an explanation as to the
50%
success of first time fund managers in the
40%
fundraising market, where 28% of funds closed since
30%
2006 have been first time funds, making up 17% of
20%
the
10%
between
overall
market
manager
in
terms
experience
of
aggregate
commitments.
19%
28%
28%
Bottom Quartile
31%
19%
Third Quartile
25%
Second Quartile
23%
23%
22%
Top Quartile
30%
25%
27%
Fund 1
Fund 2
Fund 3 and More
0%
Relationship between Successor and
Fig. 56: Relationship between Successor and Predecessor Fund Quartile
Predecessor Fund
100%
Although the level of manager experience has
relatively little bearing on the relative performance of
funds, there is a strong correlation between the
performance of different funds managed by the
same firms.
90%
6%
10%
13%
28%
80%
33%
70%
60%
Q3 Successor Fund
34%
50%
17%
Q2 Successor Fund
40%
Fig. 56 shows the relationship between predecessor
20%
and successor real estate funds managed by the
10%
same managers. Fund managers of a top quartile
0%
© 2007 Private Equity Intelligence Ltd
Q4 Successor Fund
32%
30%
fund have a probability of 48% that their successor
60%
48%
Q1 Predecessor
Fund
24%
40%
Q2 Predecessor
Fund
20%
Q1 Successor Fund
10%
14%
10%
Q3 Predecessor
Fund
Q4 Predecessor
Fund
12
BPG Properties
2,178 USD
1,014 USD
2006
•
Broadway Real Estate Partners
800 USD
2007
Brockton Capital
150 GBP
2006
Brookdale Group
665 USD
2004
Brookfield Asset Management
840 USD
2006
Bryanston Realty Partners
Buchanan Street Advisors
Cabot Properties
2006
880 USD
2006
Calare Properties
Canyon-Johnson Urban Funds
•
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•
2003
2007
•
CapMan Real Estate
1,469 USD
2006
•
Capmark Financial Group
1,655 USD
2007
•
•
Capri Capital
589 USD
2007
•
•
Caribbean Property Group
500 USD
2005
•
•
•
•
•
Carlyle Group
7,242 USD
2006
•
•
•
•
•
Carmel Partners
1,315 USD
2007
CarVal Investors
1,300 USD
2006
66 USD
2007
•
4,863 USD
2007
•
•
eric
a
Euro
pe
Res
t of
Wor
ld
•
•
1,470 USD
•
th A
m
•
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•
•
Nor
ouse
me
War
eh
ior H
o
il
•
•
•
2005
Sen
tial
•
•
•
•
•
Reta
•
•
1,625 USD
© 2007 Private Equity Intelligence Ltd
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Capitaland
CB Richard Ellis Investors
•
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Capital Trust
Castle Rock Capital Management
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Res
iden
istic
s
Med
Log
Leis
ure
d De
velo
stria
l
l
pital
ity
•
•
•
2007
872 USD
•
•
2005
1,290 USD
mer
cia
Fun
zani
n
d of
•
2006
•
Broadreach Capital Partners
•
•
2007
Bridge Investment Group
Lan
2007
•
Indu
12 USD
Hote
ls
Boutique Apartments
Hos
2007
Com
100 USD
e
Opp
ortu
nisti
c
Sec
ond
ary
Valu
e-Ad
ded
Any
Boulder Net Lease Funds
Mez
Last
Fund
Raised
Page
Fun
Value of RE
Funds
Raised (mn)
Firm Name
Core
Geographic Preferences
Core
-Plu
s
ds
Sector Preferences
pme
n
t
Fund Strategies
ical
/ He
althc
Mixe
are
d Us
e
Muli
t-Fa
mily
Offic
e
The 2007 Private
Equity
Real
Estate
Review
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Estate
Firm
Preferences
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13
The 2007 Private Equity Real Estate Review
Paladin Realty Partners
Established: 1995
10880 Wilshire Boulevard, Suite 1400, Los Angeles, CA 90024, US
Tel: +1 866 725 7348
AUM (mn): 506 USD
Paladin Realty Partners, formerly William E. Simon & Sons Realty, is an institutional investment manager Mr. James R. Worms
founded by seasoned real estate professionals in partnership with the former US Treasury Secretary,
William E. Simon, and his family. In 2005 Paladin Realty had a change in its ownership and is now wholly Mr. John A. Gerson
Mr. Fred Gortner
owned by senior management.
Office
Residential
Retail
Industrial
Commercial
Hotel
CEO
CFO
VP Real Estate
Leisure
Land Dev.
All
Rem. Value
(%)
Multiple (X)
74.9
1.21
[email protected]
Opport.
Value Add
•
Vintage
Status
Size (mn)
Called (%)
William E Simon & Sons Realty Partners
2001
Closed
306 USD
97.6
45.9
Paladin Realty Latin America Investors
2004
Closed
200 USD
Fund
Established: 1992
Time & Life Building, 1 Bruton Street, London W1J 6TL, UK
3.8
22.5
www.palmercapital.co.uk
Quartile
Date
Reported
4
31-Dec-06
Tel: +44(0) 207 409 5500
AUM (mn): 914 USD
Fax: +44(0) 207 409 5501
Palmer Capital Partner (PCP) is an UK property venture capital company, providing finance, management Mr. Christopher Digby-Bell
and advisory services to property businesses. PCP regards the support it provides to the companies as its Mr. Crispin Auden
central function. This support covers a whole spectrum of advice and assistance, including presenting to
vendors, structuring financial solutions, sourcing finance and assisting in all negotiations. As PCP has
matured it has evolved into a more broadly based investment house and is now active in structuring and Mr. Alex Price
managing property joint ventures.
Retail
Industrial
Commercial
•
•
•
•
Benchmark
Net IRR (%)
IRR (%)
38.6
Palmer Capital Partners
Residential
FofFs
•
Distributed
(%)
Office
Core-Plus
Hotel
Leisure
Land Dev.
CEO
[email protected]
Director
[email protected]
Director
[email protected]
All
Opport.
Value Add
•
•
Core-Plus
FofFs
Vintage
Status
Size (mn)
Called (%)
Distributed
(%)
Rem. Value
(%)
Multiple (X)
Net IRR (%)
Benchmark
IRR (%)
Quartile
Date
Reported
Palmer Capital Development Fund
2004
Closed
110 GBP
100.0
14.2
118.2
1.32
18.5
18.3
2
30-Jun-07
Palmer Active Value Fund
2005
Closed
49 EUR
100.0
7.9
97.3
1.05
30-Jun-07
Palmer Active Value Fund II
2006
Closed
217 EUR
100.0
0.4
96.9
0.97
30-Jun-07
Palmer Capital Development Fund II
2006
Closed
173 GBP
55.0
2.4
97.2
1.00
30-Jun-07
Fund
Parmenter Realty Partners
1111 Brickell Avenue, Suite 2910, Miami, FL 33131, US
Established: 1989
AUM (mn): 289 USD
Parmenter Realty Partners is a fully integrated real estate investment management company. It is focused Mr. Steve Bronner
on making value-orientated investments in existing Class “A” office properties and Class “B” properties that Mr. Andrew Weiss
can be enhanced to investment grade status. It operates in established commercial centres in the
Mr. Darryl W. Parmenter
southern region of the US.
© 2007 Private Equity Intelligence Ltd
www.theparmentercompany.com
[email protected]
Tel: +1 305 379 7500
Fax: +1 305 379 0009
Managing Principal
[email protected]
Managing Principal
[email protected]
President & CEO
[email protected]
14
The 2007 Private Equity Real Estate Review
Office
Residential
Retail
Industrial
Commercial
Hotel
Leisure
Land Dev.
All
Opport.
Rem. Value
(%)
Multiple (X)
•
Value Add
Core-Plus
FofFs
Quartile
Date
Reported
•
Vintage
Status
Size (mn)
Called (%)
Distributed
(%)
Parmenter Realty Fund I
1999
Closed
39 USD
100.0
127.0
151.0
2.78
19.0
13.5
1
31-Aug-07
Parmenter Realty Fund II
2002
Closed
88 USD
80.0
101.0
85.0
1.86
32.0
25.3
1
31-Aug-07
Parmenter Realty Fund III
2006
Closed
250 USD
42.0
0.3
60.0
0.60
Fund
Patron Capital Limited
Established: 1999
16 Berkeley Street, London W1J 8DZ, UK
Residential
Retail
AUM (mn): 1,350 EUR
Industrial
Commercial
Hotel
Leisure
31-Aug-07
www.patroncapital.com
Tel: +44 (0) 20 7629 9417
Fax: +44 (0) 20 7629
9418
[email protected]
Patron Capital Limited (Patron) is an investor in property, property companies and financial institutions. Mr. Keith Breslauer
The firm acts as the originator and investment advisor for Patron Capital Partners as well as other clients Mr. Jason Meads
who are seeking to invest in property in Europe.
Mr. Johannes Kalker
Office
Benchmark
Net IRR (%)
IRR (%)
Land Dev.
MD
[email protected]
MD
[email protected]
VP
[email protected]
All
Opport.
Value Add
Core-Plus
FofFs
Benchmark
IRR (%)
Quartile
Date
Reported
•
Vintage
Status
Size (mn)
Called (%)
Distributed
(%)
Patron Capital Fund I
2001
Closed
150 EUR
100.0
151.0
22.7
30-Jun-07
Patron Capital Fund II
2003
Closed
303 EUR
100.0
58.0
19.4
30-Jun-07
Patron Capital Partners III
2006
Closed
895 EUR
10.0
Fund
Penwood Real Estate Investment Management
Rem. Value
(%)
Multiple (X)
Net IRR (%)
30-Jun-07
Established: 2003
One Financial Plaza, 12th Floor, Hartford, CT 06103, US
Penwood is a Registered Investment Adviser formed in 2003 and based in Hartford, CT. Penwood is an Mr. Richard Chase
entrepreneurial real estate investment advisory group focused on the institutional investor market.
Mr. John Hurley
Penwood provides a national real estate perspective, disciplined management process and experienced
investment management. Penwood is currently focused on value-added, development, redevelopment
and rehabilitation of industrial investments in major seaport markets.
Office
Residential
Retail
Fund
Penwood Select Industrial Partners II
© 2007 Private Equity Intelligence Ltd
Industrial
Commercial
Vintage
Status
2007
Raising
Partner
Partner
Hotel
Leisure
Land Dev.
All
Size (mn)
Called (%)
Distributed
(%)
Rem. Value
(%)
Multiple (X)
Opport.
Value Add
Core-Plus
FofFs
Net IRR (%)
Benchmark
IRR (%)
Quartile
Date
Reported
15
The 2007 Private Equity Real Estate Review
University of Arizona Foundation which issued an
Fig. 60: Long-term Real Estate Target Allocation Intentions of LPs
RFP for private equity real estate funds in the first
half of 2007. It has decided to make an initial
allocation to the asset class of $10 million.
21%
1%
Increasing
Another investor that made its first moves towards
gaining exposure to private equity real estate in 2007
Decreasing
was the Swiss corporate pension fund, Schindler
Pensionskasse. It introduced a target allocation of
78%
No Change
3% of its CHF1.3 billion assets under management
to private equity real estate. It made its first
commitments to an opportunistic fund and a real
estate fund of funds. It will also consider valueadded funds.
AP-Fonden 3, the Swedish public pension fund,
pension fund will invest approximately €250 million
made the decision at the end of 2006 to commence
in around 10 Asia-focused funds over a four year
investment in private equity real estate. Its initial
period. The European mandate was of a similar size.
exposure
was
gained
through
awarding
Make up of Real Estate LP Universe by Type
Like private equity funds of all types, private equity
real estate funds attract interest from a wide variety
two
mandates to real estate fund of funds manager,
New investors like AP-Fonden 3 and Schindler
of
Aberdeen Property Investors. The first was made in
Pensionskasse are helping to fuel the massive
breakdown of the types of LPs in real estate funds by
December 2006 and was focused on providing the
growth that private equity real estate is currently
the number of separate firms. Public pension funds
Swedish pension fund with access to European real
experiencing and such support, as has been seen
and superannuation schemes account for over a
estate funds. In April 2007, it awarded a second
from both existing and new investors, provides
third of all LPs in real estate funds and are therefore
mandate to Aberdeen Property Investors to assist it
strong evidence towards the continuing expansion of
by far the largest single group of institutional
in building an Asian property funds portfolio. The
the industry.
investors in the asset class. Not only is this investor
© 2007 Private Equity Intelligence Ltd
institutional
investors.
Fig.
61
shows
the
16
The 2007 Private Equity Real Estate Review
Arizona State Retirement System
Public Pension Fund
ATP Real Estate
Asset Manager
3300 North Central Avenue
Tel: +1 602 240 2000
Gothersgade 49
Tel: +45 (0)3 336 6161
Phoenix
Fax: +1 602 240 2090
Copenhagen
Fax: +45 (0)3 336 6162
AZ 85012-0250
Web: www.asrs.state.az.us
DK-1123
Web: www.atp-ejendomme.dk
US
Denmark
Email: [email protected]
In March 2006 the Arizona State Retirement System hired the Townsend Group as its real estate
consultant. They helped the ASRS develop a new real estate program, known as the ASRS Real
Estate Implementation Plan. This plan mapped out the real estate program for 2006 to Q1 2007. This
program involved commitments to public and private real estate funds both domestic and U.S.
Between September 2005 and September 2006 the pension fund awarded 10 real estate mandates
with commitments totalling approximately USD 411 million. As of Q3 2007, it was continuing to invest in
private real estate funds and had recently committed to global opportunistic funds managed by RREEF
Alternative Investments and Westbrook Partners.
ATP views private real estate funds as a core part of its investment strategy. As of Q2 2007 the firm
had EUR 1.8 billion invested in real estate with 70% invested in core, 20% invested in value added and
10% invested in opportunistic funds. It is planning to increase its allocation to real estate to EUR 2.2
billion as it looks to expand its portfolio.
ATP prefers to invest in US and European funds but it has a
small allocation to Asia. It has not yet made any commitments to any Asian focused funds but plans to
over the next twelve months. During this period the firm plans to invest in 5 – 10 funds committing up
to EUR 500 million. It sees the real estate market as being very tough, viewing the market as being
over priced in some areas and that fund managers are setting very aggressive prices.
Total Assets (mn):
Total Assets (mn):
25,000 USD
1,800 EUR
Committed to Real Estate (mn):
Committed to Real Estate (mn):
Target for Real Estate (mn):
Target for Real Estate (mn):
Preferences:
Preferences:
Opportunistic
Value added
Core-Plus
Fund of Fs
Secondaries
Mezzanine
•
N. America
Europe
Asia
Global
•
Sample Fund Investments
First Time Funds
•
Vintage
2,200 EUR
Opportunistic
Value added
Core-Plus
•
•
•
N. America
Europe
Asia
•
•
•
Secondaries
Global
Mezzanine
First Time Funds
Fund Size (mn) Fund Focus
Commitment (mn)
Sample Fund Investments
Westbrook Real Estate Fund VII
2007
*1250 USD
US
44
2006
373 EUR
Europe
Five Arrows Realty Securities
Fund IV
UBS European Value Added
Fund
2006
162 USD
US
75
2006
373 EUR
Europe
60
DB Global Opportunity Fund II
2006
1600 USD
US
50
UBS European Value Added
Fund
Dune Real Estate Fund
2005
727 USD
US
50
Tishman Speyer European Real
Estate Venture VI
2006
1350 EUR
Europe
75
Tishman Speyer/Citigroup Real
Estate Venture VI
2004
1100 USD
US
25
Tishman Speyer European Real
Estate Venture VI
2006
1350 EUR
Europe
LaSalle Euro Growth II
2006
335 EUR
Europe
Fund Size (mn) Fund Focus
Contact Name
Position
Anthony Guarino
Deputy Director, COO
LaSalle Euro Growth II
2006
335 EUR
Europe
Gary Dokes
Chief Investment Officer
350 EUR
Europe
Executive Director
Heitman European Property
Partners III
2005
Paul Matson
Heitman European Property
Partners III
2005
350 EUR
Europe
© 2007 Private Equity Intelligence Ltd
Email
Vintage
Fund of Fs
Commitment (mn)
50
40
17
The 2007 Private Equity Real Estate Review
European Bank for Reconstruction
and Development
Bank
F.B. Heron Foundation
Family Office / Foundation
100 Broadway 17th Floor
Tel: +1 212 404 1800
Tel: +44 (0)20 7338 6000
New York
Fax: +1 212 404 1805
London
Fax: +44 (0)20 7338 6100
NY 10005
Web: www.heronfdn.org
EC2A 2JN
Web: www.ebrd.com
US
Email: [email protected]
UK
Email: [email protected]
F.B. Heron Foundation will invest in real estate funds that are compatible with the foundation’s goal of
assisting growth in low-income communities. The foundation has a preference for investing in funds
that will provide affordable housing for low-income families in the U.S or participate in urban
regeneration projects. As such it is very selective in the funds that it will invest in and will not consider
any international funds. The foundation is very keen to invest in further real estate funds as it sees
them as an integral part of its investment portfolio and also in implementing the foundation’s goals.
One Exchange Square
European Bank for Reconstruction and Development (EBRD) was established as a tool for helping to
build market economies in Eastern Europe and Central Asia. It has a defined investment philosophy,
which involves investing in those countries affected by the poor infrastructure of communism that
subsequently need help in accelerating economic growth. It is very active in investing in private real
estate related funds but will only do so if the fund will invest in such areas. Examples of the types of
investments that the EBRD makes include the Marbleton Property Fund. This fund is a value added
fund that will invest in property developments and real estate assets in Moscow, St. Petersburg and
Kiev, other neighbouring regions will also be considered. It is a diversified fund that will invest in the
main four property types. Another example is the Global Emerging Property Fund, a fund that is
investing in developmental projects in Romania, Bulgaria and Serbia. As of Q3 2007, EBRD was
continuing to make investments in the asset class, but only in funds that adhere to its strict investment
guidelines.
Total Assets (mn):
Total Assets (mn):
307 USD
Committed to Real Estate (mn):
Target for Real Estate (mn):
Preferences:
Opportunistic
Value added
Core-Plus
Fund of Fs
N. America
Europe
Asia
Global
Secondaries
Mezzanine
22,364 EUR
Committed to Real Estate (mn):
First Time Funds
•
Target for Real Estate (mn):
Sample Fund Investments
Preferences:
Opportunistic
Value added
Core-Plus
•
•
N. America
Europe
Asia
•
•
Fund of Fs
Secondaries
Global
Mezzanine
First Time Funds
Sample Fund Investments
Vintage
Fund Size (mn) Fund Focus
Marbleton Property Fund
2006
320 USD
Europe
Global Emerging Property Fund
2005
150 USD
Europe
Commitment (mn)
Contact Name
Position
Email
Henry Potter
Senior Banker
[email protected]
Sylvia Gansser-Potts
Senior Banker
[email protected]
© 2007 Private Equity Intelligence Ltd
Vintage
Fund Size (mn) Fund Focus
UrbanAmerica II
2005
400 USD
US
Canyon-Johnson Urban Fund II
2005
600 USD
US
Genesis Workforce Housing
Fund
2004
103 USD
US
Canyon-Johnson Urban Fund
2002
272 USD
US
Bay Area Smart Growth Fund I
2002
66 USD
US
UrbanAmerica I
2001
120 USD
US
Commitment (mn)
Contact Name
Position
Email
Karen Asakawa
Investment Assistant
[email protected]
Kathleen Starr
Investment Officer
[email protected]
Luther Ragin
Vice President, Investments
[email protected]
Patricia J. Kozu
VP-Finance and Admin.
[email protected]
18
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