2010AWARDS & AnnuAL REVIEW - PERE

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nORTH AMERICA INDUSTRY FIGURE OF THE YEAR 1. Barry Sternlicht, Starwood Capital Group 2. Jon Gray, the Blackstone Group 3. Mike Fascitelli, vornado realty trust Barry Sternlicht may have led Starwood Capital Group in investing billions of dollars in pools of troubled loans and distressed properties last year, but the founder of the Greenwich, Connecticut firm was still cautious when it came to the asset class in 2010. Amid uncertainty over US economic growth and future growth in the real estate sector, Sternlicht was quick to warn against the concerted push for core assets in prime markets last year. With cap rates for some deals plunging below the 5 percent mark, he questioned how investors were underwriting such transactions. “It’s a little like 2007, when cap rates were plunging but cash flows weren’t rising,” he told PERE, adding that caution would be needed when investing in 2011 and 2012. Despite the circumspection, 2010 was still a great year to be investing in real estate in the US. For Starwood, troubled loans, including mortgage portfolios from regional banks, were among the firm’s key acquisitions, with one highlight being the October purchase of the mortgage for the Viceroy hotel resort on the Caribbean island of Anguilla. Purchased for $122 million, Starwood snapped up the loan after lender Citigroup cut its losses. With an original face value of $380 million, the deal is just one example of why Sternlicht has been named North America Industry Figure of the Year. nORTH AMERICA DEAL OF THE YEAR Sternlicht: great time for cautious investing When it comes to US deals in 2010, you can’t get much bigger than General Growth Properties (GGP). Nineteen months after first filing for bankruptcy protection, the troubled REIT finally emerged from Chapter 11 in November, thanks to an $8 billion recapitalisation led by Brookfield Asset Management and the restructuring of $15 billion of its debt. For the Toronto-based fund manager, the deal was notable not just for its size but also owing to the fact much of the equity came from Brookfield’s $5.5 billion Real Estate Turnaround Consortium. The club fund originally was closed in 2009 with pledges from a handful of institutional investors and sovereign wealth funds interested in targeting distressed real estate deals in a large nORTH AMERICA FIRM OF THE YEAR 1. Starwood Capital Group 2. Brookfield Asset Management 3. the Blackstone Group When it came to closing deals in 2010, there was no one real estate sector that Starwood Capital Group preferred. In fact, other than distressed, there are few other words to describe the Greenwich, Connecticut firm’s playbook last year. From pools of troubled mortgages to the acquisition of foreclosed office properties, Starwood kept its mind open when investing. For many, though, Starwood’s affinity with the hospitality sector shone through last year, despite making up just a third of the firm’s activity. Armed with $2.8 billion of equity from its latest global opportunity and hospitality vehicles, Starwood was a presence in the sector. Capital wasn’t just flowing from Starwood’s private funds, though. The REIT, Starwood Property Trust, also was a big originator and acquirer of hospitality debt, originating a $138 million first mortgage for the reconstruction of the Hyatt Regency in New Orleans, which closed down in 2005 following Hurricane Katrina. Of course, Starwood’s attraction to hospitality wasn’t just restricted to asset-level equity and debt deals. In 2010, the firm was probably best known for its entity-level play for the Extended Stay hotel chain. The firm ultimately lost out on that deal, but that has done nothing to dampened Starwood’s appetite for the sector. One of the firm’s first deals in 2011 was the acquisition of an office property in New York for $72 million with plans to turn it into a hotel. 1. General Growth Properties’ recapitalisation by a Brookfield Asset Management-led consortium 2. extended stay Hotels acquisition by Centerbridge Partners, Paulson & Co and the Blackstone Group 3. the sale of the John Hancock tower by normandy real estate Partners and Five Mile Capital Partners 12 PERE | 2010 AwArds & AnnuAl review vehicle, but without being confined to a traditional private equity real estate structure. By investing $3 billion of the consortium’s equity in GGP as well as a further $1.7 billion of capital from Brookfield’s balance sheet and in shares, the firm now holds a 38 percent stake in the US mall operator, as well as a 14 percent interest in the spinout of GGP’s development and non-core assets, now known as The Howard Hughes Corporation. For Brookfield, the GGP deal was not just an opportunistic recapitalisation, it also was a means of helping the former bankrupt entity grow in the future. Indeed, Brookfield recently revealed it would help GGP’s core operations expand into Brazil, Europe and Asia.
Proud winner of the 2010 PERE ‘Europe Deal of theYear’ for the acquisition of 140 properties from German retailer Aldi MGPA is an independently managed private equity real estate investment advisory company focused on real estate investment in Europe and Asia. Through our network of offices in Europe and Asia, we manage approximately US$10 billion in assets. Our longstanding local presence, combined with a hands-on active asset management and development capability, allows us to see and deliver value in real estate where it might not be obvious to others. For further information please visit www.mgpa.com SeeingValue in Real Estate
Page 1 and 2: MAR 2011 | perenews.com FOR THE WOR
Page 3 and 4: Senior Editor, Real Estate Erik Kol
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Page 43 and 44: For further information please cont
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Page 47 and 48: 3Throwing down the gauntlet the tow
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Page 55 and 56: ThE DEfInITIvE guIDE TO rEal EsTaTE
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2010 Rank Name of Firm Headquarters
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EUROPE 2011 REALISING GROWTH IN NEW
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2010AWARDS & AnnuAL REVIEW - PERE

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