2010AWARDS & AnnuAL REVIEW - PERE

A warning to all general partners about to book plane tickets
to Abu Dhabi: if your purpose is to lure one of the world’s
largest sovereign wealth funds into investing in your latest
blind pool real estate fund, save your airfare. Traditional fund
commitments are not what the Abu Dhabi Investment Authority
(ADIA) is about these days.
There is change afoot within ADIA’s Real Estate Department
(RED), as it is taking a more “hands-on” approach to
managing its real estate investments. Today, RED is just as
likely to be your “equal” investment partner as your limited
partner.
Bill Schwab, ADIA’s global head of real estate, said the sovereign
wealth fund was prepared to invest its substantial petrodollars
across the property sectors in different stages of the
development process and would consider both public and private
debt and equity investments. “The mandate we have here
is very broad,” explained the 58-year-old, white-haired sixfooter,
who emigrated from London to the emirate in January
2009. “We are able to step in and out of the capital structure
and can be as flexible as we need to be if it fits our strategy and
makes sense for a particular deal.”
In fact, that strategy was first formulated in 2006. The plan
was drawn up by senior members of RED who concluded
that ADIA needed to refine its property investment approach
in order to better capture an increasingly complex set of opportunities.
Many know ADIA as one of the world’s most coveted cornerstone
LPs but, while that would not be incorrect, today
ADIA has much broader ambitions than being just that. Unlike
in the wider organisation, where 80 percent of its assets
are managed externally, RED has long invested directly and
often in joint venture partnerships.
That said, since its formation in 1976 as a replacement for
Abu Dhabi’s Financial Investments Board, real estate historically
has played a minor role (although sizable in absolute
terms) in the UAE capital’s overseas portfolio compared with
its significantly larger positions in equities and bonds. Its current
exposure to real estate is within its 5 percent to 10 percent
allocation range, pegging the value of ADIA’s property portfolio
at somewhere between $15 billion and $60 billion.
RED has sole responsibility for originating investment
ideas, and all decisions are made on a purely commercial basis.
The person who sets RED’s overall direction and oversees
the team’s activities is Majed Al Romaithi, executive director
for real estate. It was Al Romaithi who led RED’s more self-reliant
investment strategy and began the recruitment process
that resulted in Schwab’s appointment following the departure
of chief investment officer for real estate Mark Burton.
While Al Romaithi represents the real estate division in
the investment committee, Schwab is responsible for manag-
BluePrint | AsiA
Inside ADIA
in an excerpt from one of our Blueprint interviews, PERE was given an exclusive briefing
on the evolving strategy of one of the world’s most capital-rich property investors
Schwab: Leading a new regime
ing RED’s investments and is given the “latitude” to execute
the strategy. “What brought me here was the chance to have
a positive impact on one of the world’s leading real estate investors,”
Schwab explained. “We have hired some of the best
talent in the world, and these people would not have come if
they did not feel they could have a similar impact.”
Looking ahead, RED will maintain a strong focus on existing
partners, even if, on the LP side, some of the structures of
the investment vehicles they manage have become outmoded.
Schwab did offer a glimmer of hope for general partners of
private equity real estate firms offering “a degree of flexibility,
a series of reconfiguration points” and “expanded major approvals”,
but ultimately blind pool funds are now “the exception
rather than the rule”.
RED is invested in more than 100 real estate funds run by
a variety of managers. According to PERE sources, however,
ADIA recently has declined several opportunities to invest
in new funds by well-known industry players. As previously
stated, that’s not what ADIA is about these days.
2010 AwArds & AnnuAl review | PERE 59