Methodology

The PERE 30 measures equity raised between 1 January 2007 and mid-April 2012 for direct real estate investment through closed-ended, commingled real estate funds and co-invest-ment vehicles that sit alongside those funds. The vehicles must give the GP discretion over the capital, meaning club funds, separate ac-counts and joint ventures are excluded from the ranking. Also excluded are funds with strategies other than value-added and op-portunistic, such as core and core-plus, as well as those not focused on direct real estate, like fund of funds and debt funds, and funds where the primary strategy is not real estate-focused, such as general private equity.

PERE 30PERE’s ranking of the 30 largest private

equity real estate firms in the world

Spring cleaningMost of the legacy platforms from before the global financial crisis are now gone, making room for new players and the return of others in this year’s ranking

The spring cleaning mantra of ‘Out with the old, in with the new’ very much describes this year’s PERE 30 ranking. A number of legacy plat-forms that were hurt by the global financial crisis and subsequently ac-quired or wound down – including Lehman Brothers, Citi Property In-vestors and KK daVinci Advisors –are no longer present, thanks to the elimination of large 2006 vintage funds that now fall outside the ranking’s five-year fundraising window. The only remnant of such firms still in the PERE 30 ranking is Bank of America Merrill Lynch, which is hanging in on the strength of its $2.65 billion Asian Real Estate Opportunities Fund that closed in 2008.

The exit of these legacy platforms from the PERE 30 has opened the door for several new players to emerge in this year’s ranking and a few other firms to make a reappearance following an absence of a couple of years. The first-time members of the PERE 30 are Brookfield Asset Man-agement, CIM Group and Northwood Investors, while returning firms include AEW Global, JER Partners and DRA Advisors.

The positions of a few firms also were affected by decisions to return uninvested capital to investors. For example, Morgan Stanley Real Estate Investing returned $700 million from its $4.7 billion Morgan Stanley Real Estate Fund VII Global in exchange for a 12-month extension of its invest-ment period. Meanwhile, LaSalle Investment Management returned $600 million in uninvested capital rather than seek an extension for its $2.4 billion Asia Opportunity Fund III.

Despite the tough environment for fundraising, particularly in the sec-ond half of the year, some firms did find success with new funds over the past five quarters. Two of the biggest fundraisers over the past five quar-ters also happen to be the two biggest climbers in the PERE 30. Angelo Gordon & Co closed its latest opportunity fund on $1.265 billion, which propelled the firm some 11 spots in the ranking. Starwood Capital Group, which is in the middle of marketing its latest fund, moved up nine spots on the strength of $1.4 billion in equity raised so far. Lone Star Funds and The Carlyle Group also experienced incremental bumps in the ranking, thanks to successful final closings last year.

Despite all those changes, there was some stability at the top of the PERE 30. The top five firms in the ranking – The Blackstone Group, Mor-gan Stanley, Goldman Sachs, Tishman Speyer and Colony Capital – re-main the same as last year, although there have been some shifts in their order and fundraising totals. For example, Blackstone cemented its place as far and away the biggest capital-raiser in the PERE 30, thanks to the $10 billion and counting raised for its latest fund. Meanwhile, Goldman Sachs jumped from fifth to third place on the back of flexible capital that was invested opportunistically.

Looking at the PERE 30 as a whole, the cutoff for capital raised in or-der to make this year’s ranking declined from $2.48 billion last year to $2.21 billion this year. While the lower threshold allowed for Brookfield, DRA and JER to make this year’s cut, other firms like Fortress Invest-ment Group, KSL Capital Partners, Patron Capital and ARA Asset Man-agement were $200 million or less from making the PERE 30 list. As the remaining funds from before the global financial crisis fall outside the ranking’s five-year window, some if not all of these firms could make it in the next year or so.

PERE 30

2012 rank name of Firm

Capital raised ($bn)

2011 rank

1 The Blackstone Group $29.100 1

2 Morgan Stanley Real Estate Investing $12.667 2

3 Goldman Sachs Real Estate Principal Investment Area $12.124 5

4 Tishman Speyer $12.104 3

5 Colony Capital $11.654 4

6 The Carlyle Group $9.639 8

7 Lone Star Funds $7.900 10

8 Beacon Capital Partners $6.580 6

9 Westbrook Partners $6.025 11

10 LaSalle Investment Management $5.864 7

11 MGPA $5.426 13

12 Starwood Capital Group $4.595 21

13 CBRE Global Investors $4.035 15

14 AREA Property Partners $3.963 12

15 Prudential Real Estate Investors $3.959 9

16 TA Associates Realty $3.782 23

17 Angelo, Gordon & Co $3.683 28

18 Rockpoint Group $3.567 17

19 Shorenstein Properties $3.295 16

20 Bank of America Merrill Lynch Global Principal Investments $3.261 22

21 AEW Global $2.871 —

22 Hines $2.867 29

23 Brookfield Asset Management $2.728 —

24 Lubert-Adler Partners $2.604 18

25 JER Partners $2.496 —

26 Grove International Partners $2.464 30

27 CIM Group $2.371 —

28 Northwood Investors $2.310 —

29 DRA Advisors $2.250 —

30 Walton Street Capital $2.212 20

tOtal EqUity raiSEd SinCE 2007 $178.396

Legend: Higher rank than 2011 Lower rank than 2011 Same rank as 2011 PERE 30 debut PERE 30 return

The Blackstone Group $29.1 billion

Headquarters: New York Founded: 1992Real estate assets under management: $49 billion

With The Blackstone Group having raised $10 billion for its latest global opportu-nity fund, Blackstone Real Estate Part-ners (BREP) VII, the New York-based private equity and real estate giant has puts a vast amount of space between it and the next closest firm in the PERE 30 rank-ing. Indeed, it is now appears more difficult than ever to see how any firm could usurp Blackstone’s strangle-hold on the top position.

As previously reported, BREP VII fo-cuses primarily on opportunistic real es-tate opportunities in the US and Canada. By the end of February, the fund already had invested 10 percent of the capital it had raised in transactions that include the $473.1 million acquisition of 36 US shop-ping centers from Equity One; the pur-chase of a 10.1 million-square-foot subur-ban office portfolio in the US from Duke Realty for $1.08 billion; the $335 million purchase of a 3.5 million-square-foot port-folio of UK industrial properties from Pro-logis; and the acquisition of a portfolio of real estate debt and equity interests from Bank of America Merrill Lynch.

Blackstone officially launched BREP VII in April 2011 and held a first close on $4 billion in equity just four months later, at-tracting capital from investors such as the New Jersey Division of Investment and the Pennsylvania Public School Employees’ Retirement System. Other LPs, including the Teachers’ Retirement System of the State of Illinois and the State of Wiscon-sin Investment Board, came onboard later, boosting the amount of capital to $6 bil-lion by year’s end. By the time the fund holds its final close, BREP VII could be the largest closed-ended real estate fund ever, eclipsing the firm’s previous global effort, which closed on $10.9 billion in 2008.

Morgan Stanley Real Estate Investing $12.667 billion

Headquarters: New YorkFounded: 1991No of real estate professionals: 280

When Morgan Stanley Real Estate Investing (MSREI) was granted a 12-month extension on the investment period for its latest global opportunity fund, Mor-gan Stanley Real Estate Fund (MSREF) VII Global, in January, certain corners of the market compared it to a fresh equity commitment. Unfortunately for the investment bank-sponsored platform, the net result was actually a reduction in terms of total capital raised over the past five years.

In return for a year extra, MSREI’s investors, including the Government of Singapore Investment Corporation, the Canada Pension Plan Investment Board and the China Investment Corporation, required that $700 million of the remaining $2.7 billion in capital commitments be cancelled. Meanwhile, the capital raised for MSREI’s 2006 vintage fund, MSREF V, and its affiliated co-investment side-buckets no longer qualify for inclusion. These factors com-bined mean that MSREI’s total is some $3 billion lower than last year.

On a positive note, however, MSREI can still say it has raised the second-most amount of equity for private equity real estate investing over the past five years. Plans for a new $1 billion US-focused opportunity fund have been re-ported too – part of a move to introduce more regionally-focused investment vehicles to its programme. Success there could help to bolster MSREI’s fund-raising total next year.

Of course, for that to happen, MSREI would need to demonstrate decent per-formance for MSREF VII Global. PERE sources say the fund’s performance is looking strong, and the show of support from its investors would seem to underscore that.

Goldman Sachs Real Estate Principal Investment Area $12.124 billion

Headquarters: New YorkFounded: 1991Total equity raised since inception: $29 billion

In a strange quirk, Goldman Sachs’ Real Estate Principal In-vestment Area (REPIA) finds itself back in third place – hav-ing last occupied the slot in 2009 – despite having not closed on any additional capital. The reason? Put simply, the firm chose wisely when investing the capital of its US Real Estate Opportunities fund, a $1.995 billion vehicle raised in 2008, and various single-asset funds that had the scope to invest in both core and op-portunistic strategies. As it transpired, the majority of this capital was deployed opportunistically and thus becomes relevant for this ranking.

Whether REPIA can maintain this lofty position is another matter, particu-larly when considering how the platform, led by Alan Kava in New York and James Garman in London, is positioning itself more firmly in the real estate debt space. Last month, PERE revealed REPIA’s plans for a follow-up to its GS Real Estate Mezzanine Partners fund, a real estate debt fund that corralled $2.6 billion in 2008. Indeed, the firm is slated to hit the market later this year with a mission to haul in approximately $3 billion for the sequel vehicle, which this time will include Europe alongside the US in its investment thesis. Unfortu-nately, being a debt fund, none of that capital is eligible for the firm’s PERE 30 ranking total.

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Blackstone’s HQ: a fundraising mecca

Garman: focusing more on debt

42 PERE | MAY 2012

PERE 30

Tishman Speyer $12.104 billionHeadquarters: New YorkFounded: 1978No. of real estate professionals: More than 640

Down a spot from last year, Tishman Speyer remains in the top five of the PERE 30 ranking, once again benefiting from the substantial amount of co-investment capital that it has collected over the past five years. In fact, the capital raised through sidecars continues to surpass the amount of third-party equity raised for primary vehicles over the same period. Still, the firm con-tinues to rank high in the standings in part because of the significant amounts of capital it has raised through value-added and opportunistic funds, such as the $1.3 billion European Real Estate Venture VI and the $1.5 billion US Fund VII.

Adding to Tishman’s overall fundraising tally this year are more than $1 billion in closings for three regionally-focused vehicles currently in the market. Tishman Speyer Brazil Fund III, an opportunistic, development-focused fund with a $500 million target, has raised $350 million in commitments to date and is said to be on track to hold a final close this summer. In March, the firm also held a first close of $500 million for its US Fund VIII, which is targeting $750 million and will invest primarily in value-added real estate opportunities in major US cities.

Tishman typically doesn’t discuss fund investments, but Real Capital Analytics has kept track of a few. According to the data provider, recent deals executed on behalf of Tishman’s funds include the acquisitions of Foundry Square III, an office and retail redevelopment site in San Francisco, for $41 million in April and the purchase of a 57,000-square-foot building in Beverly Hills last September.

The Carlyle Group $9.639 billion

Headquarters: Washington DCFounded: 1987No. of real estate professionals: 122

The Carlyle Group’s real estate division has been fairly active these past few years, having raised nearly $10 billion in equity for property investments since 2007. Last year in particular was quite busy, with the Washington DC-based private equity firm closing its sixth US real estate fund and gearing up for its initial public offering.

In December, Carlyle confirmed that its sixth opportunistic fund, Carlyle Re-alty Partners (CRP) VI, had attracted $2.34 billion in eq-uity commitments, exceeding its initial target of $2 billion. The commingled vehicle is seeking to invest predomi-nantly in six prop-erty types – offices, hotels, retail, multifamily, senior liv-ing facilities and student housing – in major markets in the US, including New York, Los Angeles, San Francisco, Washington DC and Boston.

In an interview with PERE, Robert Stuckey, managing director and head of Carlyle’s US real estate funds, explained that the firm was looking to raise funds for CRP VI during the downturn so that it could invest during the upturn. “We believe it’s a good time to be investing,” he said, adding that he believes “LPs increasingly are willing to consider op-portunistic funds.”

Additionally, Carlyle bolstered its real estate group in preparation for its impending IPO. In January, the firm appointed 11 real estate professionals to senior positions, including three to managing director and eight to prin-cipal/director. With Carlyle looking to both go public and invest on behalf of its latest oversubscribed fund, it appears that the firm and its staff won’t be get-ting any rest in 2012 either.

Colony Capital $11.654 billionHeadquarters: Los Angeles Founded: 1991No. of real estate professionals: 191

Los Angeles-based Colony Capital is the closest thing private equity real estate has to show business. Founder Tom Barrack was once on the cover of Fortune magazine under the strap line ‘the world’s greatest real estate investor’, and he continues to feature on Bloomberg TV and other business channels. In recent times, he has even taken Colony into the entertainment business directly, buying Miramax Films in 2010 for $663 million in conjunc-tion with Qatar’s sovereign wealth fund and ‘creative partner’ Rob Lowe. And, of course, there was the famous deal to provide Michael Jackson with a loan for his Neverland Ranch property in Santa Barbara County.

Still, Colony has hardly lost its appetite for less glamorous real estate. Although the firm has suffered problems, with some investments such as Station Casinos and Xanadu going sour, Barrack and Colony have continued to raise capital for distressed real estate situations through the crisis. Although we do not count debt funds for the purposes of the PERE 30, the firm raised $885 million in 2008 for its Distressed Credit Fund and established and took public Colony Financial, a $600 million mortgage REIT, in 2009.

On the value-added and opportunistic front, the dedicated funds that Colony recently has raised are much smaller than the big daddy of its investment vehicles, the $4 billion Colony Investors VIII fund of 2007. Since then, the firm has raised two smaller opportunistic vehicles in Europe, and Colony is said to be back on the road with its latest value-added fund, Colony Realty Partners IV.

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64

Neverland Ranch: an eclectic invest-ment opportunity

Foundry Square III: Tishman’s latest

vision

Stuckey: a good time to be investing

MAY 2012 | PERE 43

PERE 30

Lone Star Funds $7.9 billionHeadquarters: DallasFounded: 1995

Capital raised since inception: $33 billion

John Grayken’s Lone Star Funds was the story of last year’s rank-ings, rising to tenth place after raising the lion’s share of its second dedicated real estate opportunity fund, Lone Star Real Estate Fund II. Ultimately, the Dallas firm fell short of reaching its original $10 billion target for the vehicle, but the fund collectively managed to attract $5.5 billion – more than any other single private equity real estate fund in 2011 with the exception of The Blackstone Group.

Although it tries to operate as under the radar as possible, Lone Star’s recent exploits have received lots of attention. Last summer, the firm won an auction for a US non- and sub-performing loan book with a face value of more than $5 billion offloaded by stricken Anglo Irish Bank. Shortly afterwards, it beat rivals to a £900 mil-lion loan book (then €1.1 billion; $1.4 billion) from semi-nation-alised UK bank Lloyds Banking Group. As Juan Pepa, its managing director in Europe, told a PERE-hosted panel at the recent MIPIM conference: “Today, in terms of volume of product in Europe, we see a lot.” Lone Star’s investors believe the firm and, more impor-tantly, have backed it up with capital.

Westbrook Partners $6.025 billion

Headquarters: New YorkFounded: 1994Currently raising: Westbrook Real Estate Fund IX

Losing managing principal Avi Banyasz in early 2011 hasn’t seemed to slow down Westbrook Partners. In fact, the New York-based private equity real estate firm is still going as strong as ever, having launched – and held a first close for – its ninth value-added global real estate fund.

It was revealed in November that Westbrook began seeking $2 billion for Westbrook Real Estate Partners IX, a commingled vehicle targeting real estate assets in New York, Washington DC, San Francisco, Los Angeles, London, Paris and Tokyo. Prior to the of-ficial start of its marketing effort, Fund IX received a total of $200 million in commitments – 10 percent of the fund’s target – from the endowments of Harvard University and Massachusetts Institute of Technology in a bid to kick-start the fundraising process.

Westbrook’s prior real estate vehicle, Fund VIII, closed on $2.3 billion in commitments in May 2008. Fund VIII still has roughly $1 billion of equity to de-ploy before its investment period ends this September. As a result, Fund IX won’t begin buying properties un-til its predecessor is fully invested.

LaSalle Investment Management $5.864 billion

Headquarters: ChicagoFounded: 1980Assets under management: $47.3 billion

As a global outfit with a huge staff of 595 real estate professionals, LaSalle Investment Man-agement offers a wide array of funds and sepa-rate accounts with differing strategies and risk profiles. It is a strategy that has allowed the Chicago-based firm, led by global chief execu-tive officer Jeff Jacobson, to emerge from the financial crisis in relatively good shape.

The main reason LaSalle is among the top 10 firm in the PERE 30 has largely to do with its fundraising efforts focused on Asia real estate. In 2008, the firm raised a massive $3 billion for LaSalle Asia Opportunity Fund III – the second largest Asia opportunistic real estate fund ever to be raised. It subsequently handed back $600 mil-lion of commitments, so just $2.4 billion of the total amount raised is still counted for the purposes of the PERE 30. It also raised a Japan logistics fund, LaSalle Japan Logistics Fund II, which enjoyed commitments of nearly $1 billion by the time of its close in 2007.

As one might expect from a firm from with a huge LP base and a global footprint, LaSalle currently is raising its next round of value-added and opportunistic vehicles in the US, Asia and Europe.

Beacon Capital Partners $6.580 billion

Headquarters: BostonFounded: 1998No. of real estate professionals: 70

Slipping two spots to eighth place, Beacon Capital Partners hasn’t raised any new capital since Bea-con Capital Strategic Partners VI, which closed on $2.54 billion in February 2010. However, that sub-stantial fundraising, along with a $4 billion predecessor that closed in 2007, helps to keep the Boston-based firm in the top 10 of the PERE 30 ranking.

Beacon instead has concentrated on putting signifi-cant amounts of capital to work, focusing on value-added office investments in markets such as Boston, Los Angeles and New York. In its most high-profile deal of 2011, Beacon beat out 12 other real estate firms to become the winning bidder for Charter Hall Office REIT’s 14-property portfolio in the US. The firm signed an agreement to purchase the assets for $1.71 billion in August, and the acquisition, made on behalf of its latest fund, closed in March.

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9

7 8

Jacobson: advocating global

growth

Wells Fargo Center: a trophy asset

via Charter Hall

Kazilionis: no signs of slowing down

44 PERE | MAY 2012

PERE 30

MGPA $5.426 billion Headquarters: London and SingaporeFounded: 2004

Total assets under management: $11 billion

MGPA maintains its high position in the PERE 30 thanks to major fundraising efforts in 2007 and 2008. The firm at-tracted $5.2 billion in equity commitments for MGPA Asia Fund III and MGPA Europe Fund III, collectively known as MGPA Fund III, and finally closed in June 2008.

Given that the European fund is well advanced in terms of deploying capital, it is no surprise that MGPA is back in the market with a follow-on opportunistic vehicle. According to an announcement in November, the firm held a first close on MGPA Europe Fund IV, with commitments of roughly $100 million. The first close is comprised of commitments from investors in MGPA Europe Fund III, it said. Focused on the UK, France, Germany and Poland, the fund seeks to take ad-vantage of current market dislocations and recapitalisations and is aiming to upgrade assets into core real estate.

MGPA also is working on a core-plus German special fund aimed at making investments in the Asian region, with a fo-cus on established markets such as Hong Kong, Singapore, Malaysia, South Korea, Japan and Taiwan. The intention is to raise up to €500 million in equity, and the fund would be able to borrow an equivalent amount to make investments.

CBRE Global Investors $4.035 billion

Headquarters: Los AngelesFounded: 1972No. of employees: roughly 1,100

Last year marked the point when CBRE Global Investors – formerly just known as CBRE Investors – took control of ING Real Estate Investment Management from the Netherland’s ING Group. Despite the attention needed by its nearly year-long takeover, which cost the global property services firm approximately $1.2 billion, it also managed to close on equity commitments on behalf of some of its commingled funds.

For example, CBRE Strategic Partners US Value VI, a commingled value-added real estate fund, closed on an initial $275 million in commitments in 2011. In addi-tion, Wood Partners Co-Investment Venture II, an op-portunistic co-investment vehicle, closed on $140 mil-lion in equity during the year.

On the firm’s overall outlook for 2012, Brett White, chief executive of parent company CBRE Group, said in an earnings call: “It is important to note that 2012 performance is likely to be more back-ended than usual due to the slow transaction environment we have expe-rienced amid heightened market uncertainty. Our out-look for 2012 assumes a pickup in job growth, economic activity and sentiment by the summer.”

AREA Property Partners $3.963 billion

Headquarters: New YorkFounded: 1993No. of real estate professionals: 111

AREA Property Partners, the independent real estate fund manager once known as Apollo Real Estate Advisors, commemorated 2011 with the close of one fund and the launch of another. The New York-based firm held a final close for its latest opportunis-tic fund, AREA Real Estate Opportunity Fund VI, on $518 mil-lion in June and, by the end of the year, had launched its newest value-added vehicle, AREA Value Enhancement Fund VIII.

AREA Value Enhancement Fund VIII is targeting $750 mil-lion in commitments to buy or recapitalise commercial proper-ties across the US, as well as distressed debt. In addition, the firm currently is looking to raise $1 billion or so for its next European fund.

However, it wasn’t all great news for AREA as John Jacobsson, a partner and original member of the firm who oversaw its US opportunity funds platform, left earlier this year to pursue oth-er opportunities. Despite the setback, global chief executive Lee Neibart continues to steer this steadily growing ship in the right direction.

Starwood Capital Group $4.595 billion

Headquarters: Greenwich, ConnecticutFounded: 1991No. of real estate partners: 47

Between its inception in 1991 and Sep-tember of last year, Starwood Capital Group has invested more than $10 bil-lion of equity in 26 million square feet of offices, 14 million square feet of retail, 62 million square feet of industrial, 49,000 multifamily units and condominiums, more than 1,000 hotels and 5,000 acres of land, not to mention more than 400 debt deals and 20 operating companies. Evidently, investors are keen for Barry Sternlicht’s firm to swallow even more, given that the firm already has raised $1.4 billion for its ninth opportunity fund.

Ultimately, Starwood wants to raise between $2 billion and $3 billion for the vehicle, PERE revealed earlier this year. To get there, the firm broke its own mould this time around as it offered fee breaks to investors committing more than $150 million of equity. It was among numerous funds to offer incentives to attract first closers, but it was one of the few who found its offer actually worked. As a result of its fundraising dexterity, the firm finds itself soaring up the ranking into 12th position.

Neibart: steering the ship

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Sternlicht: successfully tempt-

ed first closers

MAY 2012 | PERE 45

PERE 30

Prudential Real Estate Investors $3.959 billion

Headquarters: Parsippany, New JerseyFounded: 1970Gross assets under management: $48.6 billion

While no longer one of the top 10 firms, Prudential Real Estate In-vestors (PREI) successfully raised several regionally-focused funds in recent years to land solidly in the middle of the PERE 30 ranking. These include its $1 billion Asia Property Fund II in 2009 and a Latin America residential fund that raised $867.5 million in 2008.

Adding to PREI’s list of specialty fund closings is Senior Housing Partners IV, a value-added real estate vehicle that will pursue senior housing investments such as independent-living and assisted-living facilities in North America. The fund closed on a total of $568 mil-lion in commitments last month and made its first investment in October, when it acquired the 176-unit Woodland Terrace in Cary, North Carolina through a joint venture with Kisco Senior Living.

Meanwhile, Prudential reportedly is raising an industrial develop-ment vehicle for Brazil and a North America-focused opportunistic real estate fund. The firm also is in the market with PLA Residen-tial Fund V, which is targeting the Mexican pesos equivalent of $500 million and will focus on sustainable housing development in that country.

Angelo, Gordon & Co $3.683 billion

Headquarters: New YorkFounded: 1988Current equity under management: $22 billion

Angelo, Gordon & Co was undoubt-edly rocked in its capital-raising efforts by the death of senior manager and global head of real estate Keith Barket in December 2010. Apart from the sad personal ramifications of such an event for family, friends and colleagues, there also were various key-man issues with which to contend. Obviously, it also meant that any fundraising efforts needed to be put on hold.

It is remarkable then that, a little more than one year later, the firm has managed to climb the PERE 30 rank-ing by closing on $1.27 billion for its AG Realty Fund VIII, an opportunistic vehicle through which it plans to acquire distressed commercial and residential properties and/or debt from owners and lenders. The vehicle will mostly be focused on the US but, according to documents from the Nebraska Investment Council, the firm may invest up to 25 percent of its capital in Canada and the UK. Wherever the money goes, the equity haul itself has shown that there is life after Barket and that the Angelo, Gordon & Co show will go onwards and, evidently, upwards.

Rockpoint Group $3.567 billion

Headquarters: BostonFounded: 2003Currently raising: Rockpoint Real Estate Fund IV

In 2010, Rockpoint Group was focused predominantly on distressed US real estate deals. In November of that year, the Bos-ton-based firm acquired the Milford Plaza Hotel in New York’s theatre district through a joint venture with hospitality invest-ment company Highgate Holdings. The deal, valued at between $230 million and $240 million, would see the duo invest more than $75 million of additional equity for a complete renovation of the 1,300-room hotel.

Early last year, Rockpoint launched its latest investment ve-hicle, Rockpoint Real Estate Fund IV, targeting roughly $2.5 billion in equity commitments. Fund IV is following a strategy similar to that of Fund III, which closed on $2.5 billion in July 2007, with the focus largely on US distressed assets but with the added ability to invest in Europe and Asia. In addition, the firm is seeking commitments from international institutions for the first time, in addition to targeting US investors. As it stands now, PERE understands that the firm has raised some $1.05 billion in commitments for the fund.

TA Associates Realty $3.782 billion

Headquarters: BostonFounded: 1982Gross assets under management: $11.1 billion

One of this year’s bigger risers, TA Associates Re-alty moved up seven spots as several rival firms fell back in the PERE 30 ranking. However, the firm –a separate entity from Boston-based private equity shop TA Associates – also achieved hefty capital hauls with its value-added real estate investment vehicles, Realty Associates Fund VIII, which held a final close of $1.74 billion in 2007, and its successor, Fund IX, which raised $1.5 billion of equity in 2010.

TA Realty was back in the market last summer with Fund X, which SEC filings show held a first close of more than $483 million in equity in March. The vehicle, which will invest in office, industrial, retail and multifamily properties across the US, had closed on nearly $550 million of commitments as of press time and is expected to raise a total of more than $800 million by the end of the second quarter. Fund X is targeting $1.25 billion in capital, according to investor presentations by the firm, and is on track to make its first investment during the second quarter.

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Barket: his passing did not deter investors

Milford Plaza Hotel: Rockpoint’s

big ‘get’

46 PERE | MAY 2012

PERE 30

Shorenstein Properties $3.295 billion

Headquarters: San FranciscoFounded: 1992Total capital raised since inception: $6.6 billion

Shorenstein Properties is down three places in the PERE 30 ranking this year, now that its 2006 vintage fund, the $1.1 billion Shorenstein Realty In-vestors Eight, is no longer within the five-year window for consideration. Still, the San Francisco-based firm remains a solid contender, thanks to the significant amounts of capital it has rounded up for its subsequent funds: Fund Nine, which raised $2.06 billion in 2007, and Fund Ten, which closed on $1.23 billion of capital commitments last year, including a $75 million co-investment from Shorenstein.

In July, Shorenstein concluded the investment period for Fund Nine with the purchase of 13031 Jefferson Boulevard, a 20-acre commercial site in Playa Vista, California. Mean-while, the firm made its first purchase on behalf of Fund Ten in late January, acquiring 350 West Mart Center, a 1.2 mil-lion-square-foot office property in Chicago, from Vornado Realty Trust.

AEW Global $2.871 billion Headquarters: Paris and Boston Founded: 1981Total assets under management: $47 billion

AEW Global is the only European financial servic-es-owned firm to make it onto the PERE 30. Com-prised of AEW Europe and AEW Capital Manage-ment, the firm is owned by Paris-based Natixis Global Asset Management, one of the largest asset management groups in the world with around €544 billion in assets under management. In turn, Natix-is is owned by BPCE, France’s second-largest bank, which was created out of a merger of two big French banks in 2009.

AEW Global owes its presence in the PERE 30 to a combination of a $1 billion European opportunis-tic fund called the AEW European Property Inves-tors Special Opportunities Fund, which was raised in 2008, as well as four smaller value-added and opportunistic funds targeting the US and the Asia-Pacific region. As reported in March, AEW Europe is now raising its next European opportunity fund, AEW European Partners, while efforts are afoot in the US for a follow-on value-added vehicle, AEW Value Investors III.

Hines $2.867 billion

Headquarters: HoustonFounded: 1957No. of real estate professionals: 997

Clearly, Hines appreciates the value of diversi-fying its portfolio, as the Houston-based fund manager has been nearly relentless in its global investment and fundraising activity. In the past year or so, Hines has raised nearly $1 billion in equity commitments for opportunis-tic investments in North and South America, as well as Central and Eastern Europe.

In particular, Hines continues to find some traction within the emerging markets, as it closed last year on $158 million and $210 million for the fourth and fifth offerings of its Brazil Fund, respec-tively. Earlier this year, the Hines Russia & Poland Fund closed on $473 million for opportunistic real estate investments in those two markets.

The global property firm also has been active recently in the US multifamily market. Earlier this year, Hines closed on $111 million for Hines Multi-Family Investment Partners, a commingled oppor-tunistic vehicle targeting multifamily properties in North America. At this pace, it’s unlikely that Hines will be slowing down its fund-raising activities anytime soon.

Bank of America Merrill Lynch Global Principal Investments $3.261 billion

Headquarters: New YorkLife: 2005-2010Assets under management at its peak: $8 billion

When Martin Seol, head of Asia at Bank of America Merrill Lynch Glob-al Principal Investments, tendered his resignation in February, the platform finally lost its last senior executive. Remaining long after the investment bank opted to exit the real estate space, Seol principally stayed to aid the bank as it worked through legacy assets and represent its interest in its big-gest vehicle, the $2.65 billion Merrill Lynch Asian Real Estate Opportunities Fund.

The pan-Asia fund was closed at the end of 2008, just months before Merrill Lynch was acquired by Bank of America. Now under the stewardship of The Blackstone Group, that fund forms the lion’s share of the now-de-funct platform’s capital. That capital is supplemented in its five-year haul by two funds in Europe now under the management of Peakside Capital, a start-up platform spun out of Bank of America Merrill Lynch and led by Roger Barris.

350 West Mart Center: Fund Ten’s first deal

21 22

2019

Seol: last to leave

Hines: focused on emerging markets

MAY 2012 | PERE 47

PERE 30

Brookfield Asset Management $2.728 billion

Headquarters: TorontoYear founded: 1899Total assets under management: $150 billion

Brookfield Asset Management is an undisput-ed real estate heavyweight, even if its private equity real estate heft remains in question. The firm’s Real Estate Turnaround Consortium, which ultimately attracted $5.5 billion in eq-uity in 2009 when the world’s LP community was taking a hiatus from traditional blind-pool, commingled funds, attracted both praise and skepticism. Bruce Flatt, the firm’s chief executive, ad-mitted to a PERE conference audience that the non-discretionary club’s capital was a prelude to a more traditional product. In May 2011, that product finally arrived.

Brookfield Strategic Real Estate Partners is intended to bring in approximately $4 billion in equity and propel the Toronto-based firm into the same realm as its investment management contem-poraries like The Blackstone Group. The fund, it appears, has yet to take off as a significant proportion of its current five-year eq-uity haul comes from Latin and North American funds raised in 2007 and 2008 or via sector-specific, value-added vehicles like its Brookfield Industrial Partners Fund, through which it raised $410 million earlier this year.

JER Partners $2.496 billionHeadquarters: McLean, VirginiaFounded: 1981Total equity commitments since inception: More than $4 billion

McLean, Virginia-based JER Partners arguably has endured a more turbulent year than any other firm in the PERE 30. Founder Joseph Robert passed away in De-cember, and chief executive Barden Gale handed in his resignation that same month. That left manage-ment of the firm to senior director Michael McGillis and vet-erans Keith Belcher and Daniel Ward.

Meanwhile, JER Partners has been shrinking its operations. The firm jettisoned its Latin American business and transferred its European platform to LaSalle Investment Management, leaving the new management team to focus on its US assets.

The $2 billion-plus in equity that counts towards the PERE 30 ranking was raised in 2007 and 2008 via two separate Eu-rope funds and one in North America. Despite making a re-turn to the ranking this year after being on the cusp for the past couple of years, it is possible that the firm will fall out of the PERE 30 altogether unless it can raise a sizable fund by next year.

Grove International Partners $2.464 billion

Headquarters: New York Founded: 2004Number of investors: More than 80

While Grove International Partners has offices in such glob-al cities as New York, Los Angeles, Frankfurt and Tokyo, it no longer has an office in London. That is because the senior partners at Grove have jointly devised a new strategy for the firm to focus investment activity on the US, which means that much of its global headcount got redeployed last year.

For the past two years, Grove has been focusing on North America in the belief that the market has dramati-cally increased in attractiveness. The firm has a venture in California with Ned Fox called VPI, where early deals have included two large acquisitions involving office repositions. It also has a venture in New York with William Macklowe called WMC.

Behind the decision to shrink in Europe was a general stance that, relative to the US, the market was not a great place to invest. Grove, however, is pursuing a new hospi-tality platform in the region with Anders Braks, who runs Event Holding in Cologne.

Lubert-Adler Partners $2.604 billion

Headquarters: PhiladelphiaFounded: 1997Total equity invested since inception: $6.5 billion

Lubert-Adler Partners dropped six spots in this year’s ranking in part because its 2006 vintage fund, the $1.73 billion Lubert-Adler Real Estate Fund V, was no longer within the ranking’s five-year window. The Philadel-phia-based private equity real estate firm also still hasn’t brought to market a successor to its 2008 vintage fund, the $2.05 billion Lubert-Adler Real Estate Fund VI.

Lubert-Adler, however, did close on $400 million in equity last year for the fund’s second co-investment ve-hicle, Fund VI-B. That capital will be reserved for new deals and barred from investing in legacy assets held by Fund VI and another sidecar, Fund VI-A, which col-lected $148.86 million in 2010. Fund VI-B will target discounted loan payoffs and the subsequent recapitali-sation of borrowers and assets.

Lubert-Adler has actively been looking to deploy cap-ital, with Fund VI now 85 percent invested and Fund VI-A and VI-B each 50 percent invested. Notably, the firm joined forces with TPG Capital and Pacific Invest-ment Management last August to bid on the $9.65 bil-lion US loan portfolio of Anglo-Irish Bank, which ulti-mately went to the team of Lone Star Funds, Wells Fargo and JPMorgan Chase.

25

23 24

26

Robert: leadership lost

Flatt: mega fund in the offing

48 PERE | MAY 2012

PERE 30

CIM Group $2.371 billion

Headquarters: Los AngelesFounded: 1994Total assets under management: $9.5 billion

Although it has not raised a new commin-gled fund since the global financial crisis, CIM Group is a newcomer to the PERE 30. The Los Angeles-based fund manager, which had been on the cusp of making the ranking for the past few years, benefitted from a lower fundraising threshold to make the list this time around. That and the strength of its North America-focused opportunistic fund CIM Real Estate Fund III, which closed on $2.31 billion in equity in 2007.

Despite laying low in the fundraising space, CIM has been doing anything but that when it comes to acquisitions. It was revealed in April that the firm acquired Block 37, a troubled retail centre in downtown Chicago, for $84 million from Bank of America. CIM plans to lease up the building, which cur-rently is 70 percent vacant. Additionally, it was announced last month that CIM had joined a group of creditors in winning control of New York’s One Madison Park, a nearly complete 50-storey glass condominium tower that had been tied up in court proceedings for more than two years.

DRA Advisors $2.250 billion

Headquarters: New YorkFounded: 1986No. of real estate professionals: 64

After a two-year absence, DRA Advisors makes a return to the PERE 30 ranking with the help of its latest value-added real estate fund, DRA Growth and Income Fund VII. That fund, which was launched in March 2011, held a final close on $1 billion just seven months later. Fundraising for the vehicle nearly matched that of its predecessor, Fund VI, which closed on $1.25 billion in equity in 2008.

DRA, which targets the office, retail, multifam-ily and industrial sectors in the US, made its first investment on behalf of it latest fund in June. The firm acquired the Orchards at Collierville, a 226-unit apartment community in Collierville, Tennes-see, in partnership with Memphis-based Fogelman Venture Partners for $15.7 million. Since then, DRA has acquired a total of eight properties valued at more than $220 million through the vehicle. At press time, the firm was under contract to make its biggest purchase yet, acquiring a 9 million-square-foot industrial portfolio from Weingarten Realty for $382.4 million.

Walton Street Capital $2.212 billion

Headquarters: ChicagoFounded: 1994Currently raising: Walton Street Real Estate Fund VII

Walton Street Capital has been one of the more successful fundraising firms following the global financial crisis. The Chicago-based fund manager has invested in an array of different real estate ranging from single-asset transactions to complex ownership situations, entity recapitalisations and private eq-uity platform investments.

Having closed on $1.94 billion for its Walton Street Real Estate Fund VI in 2009, the firm is back in the market with Fund VII, which is targeting $2 billion in equity commitments for value-added and dis-tressed properties in the US. In particular, Fund VII will target proper-ties in the office and hotel segments.

Walton Street also has expanded its presence in Central and South-ern America. Prior to Fund VI, the firm closed on $277.1 million for its Mexican properties vehicle, Walton Street Mexico Fund I. More re-cently, in April 2011, it was revealed that Walton Street had partnered with Brazilian bank BTG Pactual for a 50 percent stake in the Golden Square Shopping Mall in Sao Paulo, marking its first foray into Brazil.

Northwood Investors $2.310 billion

Headquarters: New YorkFounded: 2006No. of investment professionals: 13

Northwood Investors is another first-timer to the PERE 30 ranking, thanks in part to a fundraising of nearly $1.1 billion last year for the second offering of its fund, Northwood Real Estate Part-ners (NREP) I. The fund, which is the brain-child of founder John Kukral, has a unique ‘evergreen’ structure, whereby the vehicle may add capital once each calendar year. That is distinct from tra-ditional open-ended funds, which can accept capital on a more frequent basis. In addition, the fund has a definite life, although it is longer than that of the typical closed-ended fund.

Kukral should know a thing or two about successful fun-draising. As the former global real estate head of The Black-stone Group from 2002 to 2005, he helped the private equity and real estate giant close its fourth and fifth funds on €600 million and $2.05 billion, respectively. His new firm now is seeking to deploy capital on behalf of NREP I, which is tar-geting distressed real estate companies and assets. Indeed, Northwood recently acquired a portfolio in the southeast-ern US for more than $160 million.

27 28

3029

Bluhm: looking to Latin America

Kukral: pioneering a new fund model

Block 37: CIM’s latest acquisition

MAY 2012 | PERE 49

PERE 30

Top 10 recent fundraising effortsThe fundraising environment for private equity real estate funds may have been challenging, but some firms were able to close on significant amounts of capital in 2011 and the first few months of 2012. Below are the 10 biggest closers of capital

rank Firm Fund nameEquity raised

(US$m)

year of final or interim

close

1 The Blackstone Group Blackstone Real Estate Partners VII* $10,200.0 2012

2 Lone Star Funds Lone Star Real Estate Fund II $5,500.0 2011

3 The Carlyle Group Carlyle Realty Partners VI $2,340.0 2011

4 KSL Capital Partners KSL Capital Partners Fund III $2,000.0 2011

5 Starwood Capital Group Starwood Global Opportunity Fund IX* $1,400.0 2012

6 Angelo, Gordon & Co AG Realty Fund VIII $1,265.0 2012

7 Northwood Investors Northwood Real Estate Partners I - second offering $1,060.0 2011

8 Rockpoint Group Rockpoint Real Estate Fund IV* $1,050.0 2012

9 Oaktree Capital Management OCM Real Estate Opportunity Fund V $1,025.0 2011

10 DRA Advisors DRA Growth & Income Fund VII $1,000.0 2011

Note: * still in market

Sizing up the Pere 30A graphic representation of the 2012 PERE 30 shows that The Blackstone Group has raised a disproportionately larger amount of capital over the past five years. The second through fifth largest firms are clustered together in the $12 billion range, after which the remaining 25 firms gradually decline from $9.6 billion to just over $2.2 billion in their capital-raising totals

Source: PERE

$0 $5 $10 $15 $20 $25 $30

Capital raised over last five years (US$bn)

The Blackstone Group $29.10

$3.68

$6.03

$2.50

$11.65

$2.87

$4.04

$2.25

$12.12

$3.30

$5.43

$2.37

$7.90

$2.73

$3.96

$12.67

$3.57

$5.86

$2.46

$9.64

$2.87

$3.96

$2.21

$12.10

$3.26

$4.60

$2.31

$6.58

$2.60

$3.78

Rockpoint Group

Prudential Real Estate Investors

Northwood Investors

Goldman Sachs Real Estate Principal Investment Area

Starwood Capital GroupMGPA

Hines

Tishman Speyer

Brookfield Asset Management

Westbrook Partners

Walton Street Capital

LaSalle Investment Management

TA Associates Realty

CBRE Global Investors

Morgan Stanley Real Estate Investing

Lubert-Adler Real Estate

Lone Star Funds

DRA Advisors

Beacon Capital Partners

Bank of America Merrill Lynch Global Principal InvestmentsAEW Global

Grove International Partners

Colony Capital

JER Partners

AREA Property Partners

Angelo, Gordon & Co

The Carlyle Group

CIM Group

Shorenstein Properties

50 PERE | MAY 2012

PERE 30

Buying activity of the top 10 firmsThe top 10 firms in this year’s PERE 30 purchased some $42.6 billion of property since the start of 2011, according to Real Capital Analytics. The Blackstone Group was far and away the most active buyer, outdistancing the next closest firm – LaSalle Investment Management – by more than $25 billion.

Selling activity of the top 10 firmsAccording to Real Capital Analytics, the top 10 firms in this year’s PERE 30 sold $45.3 billion of property since the start of 2011. The Carlyle Group topped all sellers, offloading nearly $14 billion in real estate assets over the past five quarters.

Net resultsWith just a few exceptions, the firms of the PERE 30 engaged in both the buying and selling of real estate assets over the five quar-ters since the start of 2011. Among net sellers, The Carlyle Group led all firms with $12.5 billion in net sales. For net buyers, look no further than The Blackstone Group, with more than $24 billion in net purchases.

*Data provider Real Capital Analytics has tracked the volume and value of property transactions for the PERE 30 firms from January 2011 to the end of March 2012. The data is believed to be accurate but is not guaranteed. It includes direct property transactions only; covers activity by the parent companies as well as by a firm’s dedicated real estate funds; full deal credit is allocated to both joint venture partners. © Real Capital Analytics, Inc. 2012. http://rcanalytics.com

The top 5 net buyers

Purc

hase

vol

ume

in $

m $24,154

$401$1,081 $967 $490

The Blackstone

Group

AEW Capital

Management

Northwood Investors

CIM Group

DRA Advisors

$30,000

$20,000

$15,000

$10,000

$5,000

$25,000

$0

The top 5 net sellers

Sale

s vol

ume

in $

m

$12,505

$2,703$4,187

$2,826 $2,761

LaSalle Investment

Management

JER Partners

$14,000

$10,000

$8,000

$6,000

$4,000

$2,000

$12,000

$0The Carlyle

GroupGoldman

SachsLone Star

Funds

Sale

s vol

ume

in U

S$m

The Blackstone

Group

$28,623

Tishman Speyer

$1,601

LaSalle Investment

Management

$3,241

$35,000

$30,000

$20,000

$15,000

$10,000

$5,000

$25,000

$0The Carlyle

Group

$1,474

Beacon Capital

Partners

$2,924

Goldman Sachs

$1,261

Colony Capital

$158

Morgan Stanely

$2,555

Westbrook Partners

$616

Lone Star Funds

$132

The Blackstone

Group

Tishman Speyer

LaSalle Investment

Management

$16,000

$14,000

$10,000

$8,000

$6,000

$4,000

$2,000

$12,000

$0The Carlyle

GroupBeacon Capital

Partners

Goldman Sachs

Colony CapitalMorgan Stanely

Westbrook Partners

Lone Star Funds

Sale

s vol

ume

in U

S$m

$13,978

$4,469$5,945

$3,335

$5,449

$2,982

$612

$5,004

$2,958

$582

MAY 2012 | PERE 51

PERE 30