Private Equity Real Estate Fundraising in 2015

© PERE Research & Analytics, 2015


Agenda

1. How buoyant is private real estate fundraising

market at the end of 2015?

2. What is driving the market?

3. What have LPs told PERE about their plans for real

estate in 2016?

4. How does this impact the fundraising climate next

year?


http://www.perenews.com/





Current fundraising trends


Fundraising remains strong

$163.3 $66.6 $59.7 $80.1 $99.9 $119.4 $126.5 $107.7

297

190181

259

300 295

259

146

0

50

100

150

200

250

300

350

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

2008 2009 2010 2011 2012 2013 2014 2015Q3

Nu

mb

er

of

Fu

nd

Clo

sed

Tota

l Ca

pit

al R

ais

ed

($

bn

)

Capital raised No. of fund closed


Q3 2015 was the strongest on record

post-crisis

$20.9 $30.3 $31.3 $37.0 $32.6 $28.8 $33.7 $31.4 $25.3 $30.7 $51.7

8076

67

72 73

56

74

56 56

48

42

0

10

20

30

40

50

60

70

80

90

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2013Q1 Q2 Q3 Q4 2014Q1 Q2 Q3 Q4 2015Q1 Q2 Q3

Nu

mb

er

of

Fu

nd

Clo

sed

Tota

l Ca

pit

al R

ais

ed

($

bn

)

Capital raised No. of fund closed


Top 10 2015 fund closings as of end Q3

Fund Name Fund Manager Current Size ($bn) Region Focus Sector Focus

Blackstone Real Estate Partners VIII The Blackstone Group $ 15.8 Global Diversified

Lone Star Real Estate Fund IV Lone Star Funds $ 5.9 Global Diversified

Starwood Distressed Opportunity Fund X Starwood Capital Group $ 5.6 Global Diversified

Cityhold Office Partnership - Joint Venture TIAA-CREF $ 4.7 Pan-Europe Diversified

Carlyle Realty Partners VII The Carlyle Group $ 4.2 North America Diversified

China Logistics Fund II (CLF II)Global Logistic Properties (GLP) $ 3.7 Asia-Pacific Industrial

CRE Senior 9AXA Investment Managers - Real Assets $ 3.2 Western Europe Diversified

GLP US Income Partners IGlobal Logistic Properties (GLP) $ 3.2 North America Industrial

KSL Capital Partners IV KSL Capital Partners $ 2.7 North America Hospitality

CIM Fund VIII CIM Group $ 2.4 North America Diversified


2015 PERE 50 Top 10 Global

RankLast Year's Ranking

Name Headquarters Capital Raised ($m)

1 1 The Blackstone Group New York $ 46,300.0

2 3 Starwood Capital Group Greenwich $ 14,604.1

3 2 Lone Star Funds Dallas $ 12,500.0

4 10 Global Logistic Properties Singapore $ 9,072.5

5 5 Brookfield Asset Management Toronto $ 8,512.8

6 6 Tishman Speyer New York $ 8,359.6

7 4 Colony Capital Santa Monica $ 6,468.9

8 14 The Carlyle Group Washington, DC $ 5,882.9

9 15 Fortress Investment Group New York $ 4,688.2

10 9 Oaktree Capital Management Los Angeles $ 4,325.0

Full ranking was published in May 2015 Issue of PERE Magazine.


2015 PERE 50 Top 10 APAC

RankLast Year's Ranking

Name Headquarters Capital Raised ($m)

4 10 Global Logistic Properties Singapore $ 9,072.5

40 44 Mapletree Investments Singapore $ 1,919.2

44 28 PAG/Secured Capital Hong Kong $ 1,880.4

50 37 Gaw Capital Hong Kong $ 1,785.4

56 36 Alpha Investment Partners Singapore $ 1,652.5

57 17 CapitaLand Singapore $ 1,615.0

59 40 Phoenix Property Investors Limited Hong Kong $ 1,561.8

62 69 Fosun Capital Group Shanghai $ 1,444.1

64 new SC Capital Singapore $ 1,380.0

89 56 CLSA Capital Partners Hong Kong $ 823.0

Full ranking was published in May 2015 Issue of PERE Magazine.


Developed markets dominate

28%22% 22% 24% 25% 25%

17%

32%

19%24%

12%16% 16%

20% 34%

24%

33% 34%53% 41% 41%

39%35%

34%

2% 2%

3%6% 5% 2%

2% 3%17% 17%

10% 11% 12% 14% 10% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014 2015Q3

Tota

l Ca

pit

al R

ais

ed

Global Europe North America Latin America Middle East/Africa Asia-Pacific


Asian real estate fundraising

$9.3 $6.7 $4.4 $6.3 $8.8 $12.7 $5.9 $9.3

$19.2

$4.5

$1.6

$2.3

$3.4

$4.0

$7.3 $1.3

$-

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

2008 2009 2010 2011 2012 2013 2014 2015Q3

Tota

l Ca

pit

al R

ais

ed

($

bn

)

APAC GPs Non-APAC GPs


GPs better at hitting targets

45%53%

47%38%

31%26%

19% 18%

41%34%

35%45%

46%50%

60%

48%

13% 13%18% 17%

23% 23% 21%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012 2013 2014 2015Q3

Nu

mb

er

of

Fu

nd

s C

lose

d

Under Target At Target Above Target


Time on the Road

12

1716

21

1816

1516

0

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014 2015Q3

Av

era

ge

tim

e t

ake

to

clo

se f

un

ds

(mo

nth

s)


Crowded market for fundraising

$92.6 $84.0 $37.1 $36.9 $7.0 $5.5 178 360 133 36 31 230

50

100

150

200

250

300

350

400

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

$100.0

Europe North

America

Asia-Pacific Global Latin America Middle

East/Africa

Nu

mb

er

of

Fu

nd

s in

Ma

rke

t

Tota

l Ta

rge

t Siz

e (

$b

n)

Total target size No. of funds in market


Future of the Asset Class:

LP perspectives


82 percent of respondents will make

new investments in real estate

• Investors’ target asset classes over the next 12 months

Full report was published in June 2015 Issue of PERE Magazine.

82%73%

48%

24%

8%21%

31%

54%

10% 6%

21% 22%

Real Estate Private Equity Infrastructure Hedge funds

Will make new investments Will not invest Not sure


50% investors say their investments

performed better than expected

• Investors’ investment performance over the past 12 months


50%

39%

12%

Better than expected

As expected

Short of expectation


39 percent of investors feel under-

allocated to private real estate

• Investors’ current position


39%

31%

21%

7% 2%

Under-allocated to private real

estate

At my target allocation

No target allocation and invest

opportunistically

As a dedicated real estate

manager

Over-allocated to private real

estate


20% of LPs will increase their target

allocation

• Investors’ target position over the next 12 months


50%

26%

20%

4%

Leave target allocation to private

real estate unchanged

Have no target allocation and

invest opportunistically

Increase target allocation to

private real estate

Decrease target allocation to

private real estate

Remove my real estate allocation


30% of LPs think the number of

managers is not relevant

• Investors’ number of real estate managers


32%

30%

23%

16% Optimal. I will not shift the number

over the next 12 months.

The number of managers is not

relevant.

Too many. I plan to reduce the

number of relationships we have

over the next 12 months.

Too few. I plan to invest with new

managers over the next 12

months.


Track record and strategy matter

most to LPs

• Investors’ criteria of selecting a private real estate fund manager


2

4

6

9

18

40

3

4

13

10

18

12

19

5

2

7

14

17

16

9

8

Preferential fundraising terms

Level of co-investment

Quality and quantity of manager communication

Adherence to ESG principles

Fees

Team stability/retention strategy

Alignment of interests

Proven operational expertise

Clarity of strategy

Manager's track record

1st

2nd

3rd


USA and UK remain most attractive

• Developed markets that investors expect to find the most attractive

opportunities


3%

9%

10%

17%

18%

18%

25%

25%

27%

27%

28%

37%

43%

51%

82%

Switzerland

Korea

Hong Kong

Canada

Netherlands

Singapore

Nordics

Italy

France

Japan

Australia

Germany

Spain

UK

USA


More investors prefer Western Europe

to North America

• Investors’ target regions over the next 12 months


0%

5%

8%

12%

13%

18%

30%

32%

53%

59%

Middle East only funds

Africa only funds

Central and Eastern Europe only funds

Latin America only funds

Emerging Asia-Pacific only funds

Undecided

Developed Asia-Pacific only funds

Multi-region/global funds

North America only funds

Western Europe only funds


India leads emerging markets

• Emerging markets that Investors expect to find the most attractive

opportunities


3%

10%

10%

13%

15%

18%

27%

33%

36%

39%

46%

46%

48%

60%

Morocco

Peru

Middle East

Sub-Saharan Africa

Russia

Thailand

Colombia

Indonesia

Turkey

Poland

Brazil

China

Mexico

India


Office is still dominant strategy

• Investors’ target sectors over the next 12 months


8%

21%

26%

32%

34%

54%

55%

56%

61%

Other

Hotels

Student Housing

Senior Housing

Healthcare

Industrial

Retail

Multifamily/Residential

Office


LPs welcome new real estate lenders,

but split on PE firms coming into PE

• Investors’ views on the current trends


25%

5%

8%

10%

24%

46%

29%

56%

59%

67%

55%

42%

46%

40%

33%

25%

19%

11%

Traditional PE firms coming into real estate

Dominance of a few major players

Fund managers outsourcing internal or

operational functions

Fewer managers exclusively committed to

closed-ended funds models

Pricing disparities between top international

markets and all others

Emergence of private debt managers in real

estate lending

Positive

Neutral

Negative


Conclusions

1. Private real estate continue its strong fundraising record as LPs are

attracted to its characteristics

2. Allocations will increase over the long-term but LPs continue to be

selective over fund offerings

3. Largest GPs continue to dominate but LPs suggest this is not always

for the best


Presented by

Dan Gunner

Director, Research

PERE

www.perenews.com

[email protected]


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