2010AWARDS & AnnuAL REVIEW - PERE

More documents

Recommendations

Info

CoMMentAries | AsiA Land of opportunity excerpts from the best of PERE’s ‘Asiaview’ columns show that opportunities abounded for investors throughout the region Should I stay or should I go? with invesco as the sole bidder for AiG real estate’s Asia fund business, investors in its uninvested fund had a big decision to make In November, PERE revealed that Invesco had emerged as the sole bidder for AIG Real Estate’s Asia fund management business. After a lengthy period on the market, it looked like American International Group, one of the poster boys of the financial crisis, was poised to shed a platform with approximately $5 billion in gross assets. As with Citi Property Investors’ (CPI) sale to Apollo Global Management and the transfer of the Asia real estate investment management business of Bank of America Merrill Lynch (BoA ML) to The Blackstone Group, AIG’s LPs were central to the deal going ahead. Specifically, it was the LPs in its AIG Asian Real Estate Partners II fund, which still had approximately 80 percent of the $740 million raised in September 2008 uninvested. Indeed, the LPs had a big decision to make: whether to approve or block the acquisition. The decision would be crucial as a successful takeover (and who knows how long that could take, given that Apollo-CPI took eight months) would see the approximately 20-strong investor pool, including North American institutions and sovereign wealth funds, inherit a proposition they didn’t originally sign up for. On the one hand, Invesco is a seemingly stable entity with aspirations to grow meaningfully in Asia and, perhaps more importantly, has no legacy issues to contend with. For most of the LPs, however, the investing landscape has changed since they penned their initial commitments. Some have since reverted away from blind pool, commingled funds entirely, now favouring separate accounts. PERE was still awaiting the LPs’ verdict at press time. nearly, nearly the sale of an it park in Mumbai presented itself as just the medicine india’s exit-starved institutional market needed Just how successful the sale of Peepal Tree Properties, a specialpurpose vehicle that owns a 786,000-square-foot IT park in Mumbai, will be in curing India’s exit-starved institutional real estate market will be known shortly. Srini Wasan, the manager of the fund that owns the SPV, said in October that two institutional investors — one global and one domestic —had agreed to terms to buy the 2008 greenfield development for about $115 million. A deal was expected before 54 PERE | 2010 AwArds & AnnuAl review the year expired. The willpower behind the completion of this deal was hugely palatable for India’s private equity fund managers, particularly should the investment end up in the hands of the global option. A glance at recent research by Venture Intelligence showed how international funds invested just $183 million into real estate deals in 2009 and just $123 million in 2010, as investors were turned off by few visible exits in the aftermath of the global economic downturn. Success would demonstrate the ability of a domestic fund to exit to an international investor and give others more comfort with the notion of an investible India ahead. The Peepal Tree deal suggested the market is nearly there. A big new route for China september’s ruling by the CirC offered a more viable exit for certain investment strategies September’s ruling by China’s insurance regulator, the China Insurance Regulatory Commission (CIRC), to allow Chinese insurance companies to invest up to 10 percent of their assets in real estate undoubtedly provided the Chinese real estate investor with numerous positives. Predictions of how much would be committed to the asset class by the $670 billion insurance sector have been numerous and diverse. An amount between $15 billion and $100 billion reportedly had been earmarked for deployment from big guns such as China Life and Ping An. One source PERE spoke to foresaw greater demand for institutional-grade assets as a consequence and less speculative investing – a sure sign of a maturing market. “These guys are going to be long-term owners, and that’s a good thing for the market,” he remarked. “Soon, we’ll have greater flexibility in terms of who we can sell to.” The introduction of insurance capital in China offers a sustainable exit channel for private equity real estate firms, but certain firms with existing China strategies should consider themselves a little more fortunate than others. The CIRC rules stated that insurers cannot invest in residential assets, perhaps as part of wider market-cooling state prerogatives, but those firms with retail strategies could offer insurers real estate directly associated with China’s rising consumer base now that housing was off the table. Harvest Capital is one such firm, having launched two vehicles aimed at increasing its exposure to retail at the turn of the year. Meanwhile, CITIC Capital signaled its intention to prioritise retail investing over residential as it purchased its first shopping centre project in Changsha, Hunan Province. For firms such as these, there is a big new exit route for their properties.
Trap for some, honey for others despite stories of private equity firms running into trouble with their Macau investments, the gaming state’s demographics were impossible to ignore Is Macau a honey trap for international investors? The mess that is Macau Studio City was the latest in a line of stories emanating from the former Portuguese colony that would suggest so. A three-year dispute over financing between the multiple owners of the casino development – including Oaktree Capital Management and Silver Point Capital – could end with it being handed back to Macau authorities. If so, the two investors would be hit with a loss of $250 million. Non-gaming schemes backed by private equity also hit difficulties, particularly those without secure planning consents at the time of the conviction of Ao Man-long, Macao’s former ministry of transport and public works responsible for planning decisions. After he was jailed for 27 years in January 2008 amid a state-wide corruption and bribery scandal, numerous schemes were hit with more onerous zoning constraints. While there are anecdotes aplenty of real estate investors running aground, it is impossible not to be attracted to Macao’s honey despite its numerous traps. Macau generated GDP growth of 8.2 percent and record gaming revenues of $15 billion in 2009. In comparison, Las Vegas generated $10.4 billion. Considering that gambling is the Chinese national pastime and there is just one place – Macau – where it can be done legally, it is illogical not to allocate something. More importantly, firms have been able to make full-circle investments in Macau and handsome profits. Take Manhattan, the joint venture residential scheme between Citi Property Investors and local developer-cum-investor Macauland. Within a couple of years, the partners had sold and their exit reflected an IRR of more than 30 percent and a 1.8x equity multiple. Probing China’s bubble Private equity real estate firms considered their options as China’s real estate market continued to heat up When chairman and managing director of JPMorgan Chase’s China equities division, Jing Ulrich, painted a picture of China’s overheating real estate market for the benefit of delegates at the PERE Forum: Asia in February of last year, she could not have guessed that the temperature would continue rising. Ulrich, who was featured in Forbes’ 100 most powerful women table two years ago, told the audience how China’s GDP growth had reached 10.7 percent in the final quarter of 2008, predominantly on the back of a rising domestic real estate market. Ulrich explained how loose government policy and bank lending had led to record growth in real estate lending of 33 percent year-on-year (compared with a five-year average of between 14 percent and 16 percent), spawning worrying levels of real estate speculation. But she suggested the government had taken adequate measures to stem the inflation of an uncontrollable bubble, ensuring Chinese real estate would receive a soft landing should the bubble burst. Forecasting that property sales and acquisitions would fall by 15 percent in 2010, Ulrich predicted 2010 would yield little further government intervention, but the opposite happened. With GDP growth at 11.9 percent year-on-year, according to China’s National Bureau of Statistics, Beijing introduced extra taxes on areas including individual’s profits from property sales. And it appears the government isn’t letting up in 2011, having already announced property tax trials on some homes in high-value areas of Shanghai in January. new GPs wanted lPs on stage at the Pere Forum: Asia expressed support for first time funds. that was good news as there were many new funds in the works Any delegate at the PERE Forum: Asia thinking of setting up his or her own real estate fund management platform would have been heartened by what was said on stage during the final panel conversation. Five LPs, either already invested in Asia real estate funds or seriously thinking about committing to Asia real estate funds, unanimously agreed they were keen to support qualified first-time fund managers. One LP – Nirav Kachalia, managing director of investments at US- and Asia-focused investment advisor Morgan Creek – was so keen to stress his support for newcomers he told delegates his firm had backed 70 first-time funds. Furthermore, 60 percent of the managers backed by his organisation were through funds one, two or three. Doug Coulter, vice president and head of private equity for Asia Pacific at private equity fund of funds business LGT Partners, went one further when he said the firm’s best performances on balance had come from backing first-time funds. He told delegates the firm, which had only made minor investments in real estate vehicles in Europe before now, was seriously considering a more extensive Asia investment programme. The other three participants – including the panel chair, another LP – made similarly encouraging remarks. This was good news for anyone thinking of spinning out to start a new firm. In the three months prior to the conference, PERE broke multiple news stories of individuals flying their own fund management flags for the first time. One often hears that many investors avoid “first-time funds”. However, in a less mature market like Asia, there simply aren’t that many Fund IIIs out there. In addition, in today’s turbulent real estate market, investors are keen to back talented groups that are not saddled with disastrous portfolios and who will pursue fresh strategies informed by the painful mistakes of the last cycle. Indeed, it’s time to back the next generation. 2010 AwArds & AnnuAl review | PERE 55
Page 1 and 2:
MAR 2011 | perenews.com FOR THE WOR
Page 3 and 4:
Senior Editor, Real Estate Erik Kol
Page 5 and 6: OWNERS OPERATORS & INVESTORS IN REA
Page 8 and 9: GLOBAL pg. 8 GLOBAL INDUSTRY FIGURE
Page 10 and 11: GLOBAL INDUSTRY FIGURE OF THE YEAR
Page 12 and 13: GLOBAL When it comes to deals, you
Page 14 and 15: nORTH AMERICA INDUSTRY FIGURE OF TH
Page 16 and 17: nORTH AMERICA FUNDRAISE OF THE YEAR
Page 18: EuROPE INDUSTRY FIGURE OF THE YEAR
Page 21 and 22: We are honored to receive the PERE
Page 23 and 24: ASIA INDUSTRY FIGURE OF THE YEAR AS
Page 25 and 26: Brazil Canada China France Germany
Page 27 and 28: AnnuAL REVIEW
Page 29 and 30: Taking all this into consideration,
Page 31 and 32: AnnuAL REVIEW | AMERICAS
Page 33 and 34: Real Estate... it’s our world Suc
Page 35 and 36: As one real estate deal professiona
Page 37 and 38: Investors, among others. After bein
Page 39 and 40: In June, Morgan Stanley Real Estate
Page 41 and 42: AnnuAL REVIEW | EuROPE
Page 43 and 44: For further information please cont
Page 45 and 46: seas real estate and had been large
Page 47 and 48: 3Throwing down the gauntlet the tow
Page 49 and 50: Political football An excerpt from
Page 51 and 52: (L to R) Bernard Phang and Peter Pe
Page 53 and 54: AnnuAL REVIEW | ASIA
Page 55: ThE DEfInITIvE guIDE TO rEal EsTaTE
Page 59 and 60: disaffected investor pools to do li
Page 61 and 62: A warning to all general partners a
Page 63 and 64: AnnuAL REVIEW | DATA
Page 65 and 66: 2010 Rank Name of Firm Headquarters
Page 67 and 68: EUROPE 2011 REALISING GROWTH IN NEW
Page 69: PERE MAr 2011
show all

2010AWARDS & AnnuAL REVIEW - PERE

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?