2009 was a year in which private equity real estate professionals were put to the ultimate test. However, which firms, individuals and deals stood out from the crowd? Which firms positioned themselves to thrive amid the chaos of the property downturn? PERE and PERENews.com readers voted in their thousands trying to answer such a question.
Here we present the Europe results of the PERE Awards 2009.
EUROPE INDUSTRY FIGURE OF THE YEAR
1. EDWARD SISKIND, Global Head, Goldman Sachs Real Estate Principal Investment Area (REPIA)
2. Richard Plummer, Chairman, Rockspring Property Investment Managers
3. Chad Pike, Co-Head Real Estate, The Blackstone Group
Goldman Sachs doesn’t win many popularity contests. Of late, it has been lambasted by governments for trying to re-introduce mega bonuses, derided over a claim by chief executive Lloyd Blankfein that the bank is doing God’s work and questioned over its overall involvement in subprime investments. And that’s before we mention criticism over the performance of its real estate Whitehall Street Funds. Despite all that, one of its own has been voted industry personality of the year in Europe. Edward Siskind had the distinction in 2009 of becoming the first London-based professional to be made head of Goldman Sachs’ Real Estate Principal Investment Area. He deserves the shot having stayed loyal to the platform since it was established in the early 1990s. Peers complain they don’t see much of Siskind on the real estate circuit, but he has been busy restructuring the department as well as executing deals. It’s true that Goldman Sachs doesn’t win many popularity contests, but judging by the votes that came in for Siskind, he is well liked and respected by peers and colleagues working at Archon Group. When told of the news that Siskind had been promoted last year, one prominent GP was flattering, adding Siskind was a “nice guy”. Nice guys don’t usually win, so they say, but in this case, one has.
EUROPE FIRM OF THE YEAR
1. PARTNERS GROUP
2. Rockspring Property Investment Management
3. Forum Partners
Swiss-based alternatives private markets group, Partners Group, has expanded its real estate business so much that in 2009 it decided to form a separate department, co-headed by Claude Angéloz. The decision was triggered by the culmination of a fundraising effort that saw Partners raise one of the few global real estate vehicles in 2009, Partners Group Global Real Estate 2008. The vehicle managed to raise €275 million. In a busy year, it set about investing on behalf of investors in a whole gamut of disciplines. But perhaps of greatest significance was the ability to deploy equity in secondary deals. Client successes in 2009 included winning work with The Avon Pension Fund, the local authority pension scheme of UK city, Bath, which awarded the firm a £90 million (€100 million; $149 million) mandate to invest in property globally. Partners put some of the money to work buying a residential loan portfolio at 36 percent below face value. Partners also helped Bath get exposure to Asia by carrying out secondary investments in funds operating in the region. Partners also put in the work for opportunistic strategies winning a mandate to invest in value-added and opportunistic real estate funds in Europe. Let’s not forget, this mandate came in a year in which investors generally favoured core real estate funds.
EUROPE DEAL OF THE YEAR
1. HSBC CANARY WHARF HEADQUARTERS SALE
2. BBVA sale-leaseback portfolio
3. Dawnay Day UK portfolio
Wow. There were some clever and innovative deals by private equity real estate firms in Europe, but for sheer size this is a knock-out. While everyone was moaning about lack of bank credit, along came the National Pension Service of Korea to take down the global headquarters of HSBC Bank for £772 million (€863 million; $1.29 billion). Unsurprisingly, it turned out to be the biggest single asset transaction of 2009. It was also a knock out deal for HSBC which had already profited from the asset. The smart guys at HSBC first sold the tower to Spanish property company Metrovacesa for a record £1.1 billion in 2007, and then bought it back at a discount a year later after the Spanish property company ran into financial difficulties. An announcement by HSBC confirmed the bank made a gain of approximately £350 million through its sale to the National Pension Service of Korea. The Korean pension was advised by JPMorgan Asset Management in its purchase. Under terms of the deal, NPS has a 100 percent stake in a holding company which owns the 998-year lease on the building, while HSBC remains a tenant for another 17.5 years at a rent of £46 million a year. We just ask, when will it be sold again?
EUROPE FUNDRAISE OF THE YEAR
1. Benson Elliot Real Estate Partners III
2. Orion European Real Estate Fund III
3. Mountgrange Real Estate Opportunity Fund
It was the “worst market in history” when Benson Elliot hit the fundraising trail in the third quarter of 2008, according to the firm’s founder. Nevertheless, Marc Mogull and his team – aided by placement agent Probitas Partners – managed to meet their target. One voter commented during the PERE Awards voting period that the company deserved credit because it could have raised a larger amount of capital. Instead it decided to cap BEREP III at a size 50 percent larger than the company’s previous fund, notwithstanding strong investor demand. The fund also drew praise at the time of the fundraise for the way the firm aligned interests with investors. But that was not the only reason investors went into the fund. “Obviously, you have got to be dealing with investors who believe that current market conditions will throw off extraordinary investment opportunities as well,” said Mogull in February 2009 when the vehicle closed. Existing investors agreed to increase the investment size, while the firm also managed to attract a number of new investors such as UTIMCO, one of the largest university endowments in the US. Mogull said investors gave Benson Elliot credit for having scaled back the predecessor fund size in 2006, unlike many others raising funds at the time, and for investing selectively thereafter.
EUROPE DEBT INVESTOR OF THE YEAR
1. Lone Star Funds
3. Apollo Global Management
Lone Star went large in European debt in 2009. Though the market (and the firm) is a little opaque, the John Grayken-led operation bought around €5 billion face value of European real estate debt. Some of those debt positions were in UK loans. Probably the most significant deal was acquiring a reported €2 billion-plus debt book from Swiss bank Credit Suisse last year. Additional reports suggested Credit Suisse retained a 49 percent equity interest in the deal. Lone Star staffed up to help the effort. It took on Angus Dodd from McLean, Virginia-based real estate firm JER Partners and another professional from Morgan Stanley. It also opened an office for mortgage servicer Hudson Advisors in London, to help manage and work out the loans. Hudson is an affiliate of the Dallas-based firm. Knowing Lone Star, the workers in this Hudson office are going to be toiling very hard indeed as they handle an expected wave of additional loans that Lone Star will amass.
EUROPE PLACEMENT AGENT OF THE YEAR
1. Credit Suisse Real Estate Private Fund Group
2. Probitas Partners
3. Capital & Marketing Group
When it came to fundraising in 2009, managers with two or three funds under their belt certainly shone through the pack. For Credit Suisse Real Estate Private Fund Group, one of the success stories from a tough capital raising year was the final close of Orion Capital Managers’ €1.3 billion opportunity fund. The firm’s eight-strong London-based team – led by co-head Fredrik Elwing – saw phenomenal support from existing investors as well as new LPs, ensuring the vehicle could close by December last year raising 60 percent more than Fund II. Credit Suisse REPFG believes part of the reason why investors were attracted to Orion was due to the firm’s discipline in 2006 and 2007, when it became a significant net seller. That’s not to say first time managers can’t win over new investment relationships. Credit Suisse REPFG reportedly helped London-based Mountgrange Investment Management close its debut vehicle on £300 million (€342 million; $475 million) of commitments last May, attracting more than 30 global investors for the Mountgrange Real Estate Opportunity Fund. With investors starting to look afresh at the real estate asset class in 2010, Credit Suisse REPFG is well-positioned to once again be delivered to the top spot in next year’s PERE awards.
EUROPE FUNDS OF FUND OF THE YEAR
1. Aberdeen Property Investors
2. Aviva Investors Global Real Estate Multi-Manager Group
3. Composition Capital Partners
Aberdeen bounced back last year from the loss of some key personnel in 2008 following the acquisition of Goodman Property Investors. The firm bulked up team members in Aberdeen Property Investors Indirect Investment Management to 28 professionals after making six senior appointments across Europe and Asia. Sweden-based Aberdeen also managed to raise its second Asia fund of funds. Of course, as similar tales in these awards suggest, it was not easy raising $400 million for the AIPP Asia Select Fund, the follow-up to the $600 million AIPP Asia Fund which closed in September 2007. Aberdeen’s indirect business is led by Jon Lekander. In Europe, its new hires included Antonio Alvarez and Fredrik Eliasson as investment director and deputy fund manager respectively to work out of its Stockholm office.
EUROPE LAW FIRM OF THE YEAR (FUND FORMATION)
1. Clifford Chance
2. SJ Berwin
3 Freshfields Bruckhaur Deringer
The work of Nigel Hatfield and Clifford Chance’s European fund formation team reflected investor mood last year with a growing emphasis on advice for club vehicles and separate accounts as well as mainstream fundraisings. The firm advised Rockspring Property Investment Managers on two separate accounts. One of them is thought to be with the National Pension Service of Korea, which is currently scouting assets in London. Clifford Chance‘s fund formation team also advised Rockspring on its UK Value Fund, which held a first close in November on £152 million (€173.1 million; $237 million) from five investors from the UK and Continental Europe. And it didn’t stop there. The law firm also advised HSBC Bank on its HSBC European Active Real Estate Fund, which raised around €400 million last year. It is also working with a number of others such as Paris-based AEW Europe, Pramerica Real Estate Investors, Colony Capital, BlackRock and UK pension fund, Legal & General.
EUROPE LAW FIRM OF THE YEAR (TRANSACTIONS)
1. Freshfields Bruckhaus Deringer
2. Mayer Brown
3. Slaughter & May
Advising one of the runners-up in PERE’s Europe deal of the year category, it’s clear to see why Freshfields was voted European law firm of the year (transactions). Freshfields corporate partner Armando Albarrán led the BBVA sale-leaseback deal supported by a team including real estate partner, Juan Gomez-Acebo. It also drew in London-based real estate partners, Christopher Morris and Mark Wheelhouse. The €1.2 billion BBVA transaction involved RREEF Alternative Investments, Area Property Partners and Europa Capital. In 2009, Freshfields also got in on the 50 percent joint venture set up by The Blackstone Group and British Land to own London’s Broadgate office complex. Freshfields’ real estate advice to British Land was led by partner, Emma Kendall and real estate associate Katrina Ovenden. The deal was a £2.13 billion (€2.4 billion; $3.3 billion) joint venture and strategic partnership to own and manage the 30-acre City of London office estate. Another scoop was advising Australia’s Valad Property Group on forming a JV with Bank of Scotland, allowing Valad to continue with a three-year UK and European property venture amid a corporate restructuring of the group. Anette Byron led the advice.
EUROPE LIMITED PARTNER OF THE YEAR
1. The Wellcome Trust
2. The European Bank for Reconstruction and Development
3. Composition Capital Partners
In normal times, one would win an award for being a limited partner by writing out jumbo cheques for property funds. However, reflecting a different era, The Wellcome Trust was more likely to be investing in club deals or direct property programmes last year. But The Wellcome Trust scooped the award in Europe given a number of other factors. The medical research charitable foundation has been one of the more vocal interlocutors in the fight against the European Commission’s directive on Alternative Investment Fund Managers. Chief investment officer, Danny Truell, raised a red flag to UK legislators highlighting the importance of alternative investment funds to investors and “unintended consequences” of proposed legislation. The charity also showed its green credentials in Europe, funding the first phase of a development to create Verne Global’s data centre campus in Iceland. Closer to home, Peter Pereira Gray, managing director, investment division, built up a reputation last year for leading investor discussions when LPs faced challenging issues with a fund manager. He is known for being creative yet firm.
EUROPE BROKER OF THE YEAR
1. Jones Lang LaSalle
2. Cushman & Wakefield
Deals were few and far between for brokers, but among Jones Lang LaSalle’s European success stories was advising MGPA in selling Munich City Tower in Germany for €50 million on behalf of MGPA’s Global Fund I. The landmark skyscraper was sold to Freo Germany II Partners, a private equity fund run by Luxembourg-based Freo Group. Jones Lang LaSalle also chalked up a deal for LaSalle Investment Management, which sold 5 Strand in London, the headquarters office of UK REIT Land Securities. The property was held in the HSBC Pension Trust fund and managed on its behalf by LaSalle. In Sweden, JLL acted for RREEF on the sale of retail and office property, Baltzar City in Malmö, Sweden. The property was acquired by Catella Real Estate on behalf of the Focus Nordic Cities fund, for around €40 million.