In May, Kennedy Wilson announced it had sold a 41.5% stake
in a six-asset multifamily portfolio for $422 million. Soon after,
reports emerged that the buyer in the deal was none other
than the Blackstone Group.
Score another deal for the biggest real estate fund manager
in the world. The company has topped a list of global real
estate fund managers for the second year running, with assets
under management of $214.9 billion up by $47.8 billion from
the previous year, according to the Fund Manager Survey 2018,
published by INREV, ANREV and NCREIF.
The survey also reveals an 11% uplift in total AUM among
global real estate funds from $2.7 trillion to $3.14 trillion in
2017. “Real estate is clearly firing on all cylinders with the top
ten players making very sizeable gains,” says INREV CEO
Lonneke Löwik. “One of the really exciting elements of this
year’s survey is that non-listed funds have proved a powerful
engine for overall growth. It’s a picture we’ve seen emerging
over the past four years and all the indications are that this
trend is set to continue.”
For the first time, managers needed to achieve AUM in
excess of $116.7 billion to feature in the top five, which this
year included: Blackstone Group, Brookfield Asset
Management, PGIM, Hines and TH Real Estate. In 2015, the
equivalent figure was less than $70 billion.
Brookfield Asset Management posted total real estate AUM of
$172.5 billion, a modest 5.3% increase from the previous year
bringing it to second place. In third position was PGIM with $141.6
billion of real estate AUM. Hines and TH Real Estate had $122.1
billion and $121.1 billion respectively.
PGIM topped the list for North American strategies with
AUM of $111.6 billion, much larger than the $73.5 billion
recorded by AXA Investment Managers–Real Assets, which
earned first place among managers operating European strategies. In Asia Pacific CapitaLand Ltd. ranked first with $53.5 billion while the Blackstone Group earned its top place among
global strategy managers with $109.1 billion, ahead of Prologis
with $83.1 billion.
While growth was greatest among large fund managers, with the
top 10 managers accounting for 38.7% of the global total, gains
were made across the board with average AUM for all 162 survey
participants reaching $19.4 billion, compared with $15.8 billion in
2016, according to the survey.—Erika Morphy
One Factor Behind
The Bid-Ask Gap
Commercial real estate has a bid-ask
gap problem. Buyers and sellers are
unwilling or unable to come to
agreement on the price of an asset.
There are a lot of factors that go into
this logjam starting with the varying
opinions on where the cycle is.
PwC’s real estate deals leader Tim
Bodner happens to believe that
assets are fairly priced right now,
largely because in most sectors operating fundamentals remain stable.
Also, he says leverage is not anywhere
near what it was in prior cycles.
But Bodner dismisses the notion
that buyers have concluded that valuations are too rich. Rather, he says
the bid-ask gap is more a function of
the large amount of private equity
that is circulating in the market,
their cost of capital is—and what
they are able to get from a return
perspective, based on that cost of
capital. “Your opportunistic funds
generally have a higher cost of capital and so it is a lot harder with that
cost of capital to get the yield to work
where the market is,” he says.
Blackstone Tops List of Global Real Estate Funds
UP Front A comprehensive look at what’s trending in the world of commercial real estate
Further demonstrating the critical need for
housing in the San Francisco Bay Area, one
property may eventually go from 100% occupied office building to a 100% occupied
multifamily complex. The sale of Parkway
Center, a two-story 71,742-square-foot office
building, may pave the way for a potential
redevelopment to multifamily, say sources
close to the transaction. The buyer was the
Stanley Group Inc. of Los Gatos, CA, which
purchased the asset for an undisclosed price.
Parkway Center is a multi-tenant office
building with such tenants as Lipman
Insurance Administrators, Coldwell Banker,
Chicago Title and the Center of Speech.
Located at 3340 Walnut Ave., it’s in close prox-
imity to the Fremont BART station and sur-
rounded by numerous retail amenities.
NKF Capital Markets vice chairman Steve
Golubchik and director Tim Walling represented the seller, Bayside Realty, in the transaction, as well as the buyer.
“Parkway Center offered a great opportunity for an investor to increase NOI by bringing the current tenants to market rents to take
advantage of dwindling office supply. Given
that Parkway Center is part of a multifamily
zoning overlay, it is a prime candidate to be
redeveloped in the coming years,” says Walling.
Despite the building’s full occupancy, the
development will most certainly not be of an
office nature due to housing demand and its
location. “It will be developed to multifamily,
given the rising multifamily rental rates and
lack of supply,” says Walling.
For now, the Stanley Group is enthusiastic
about adding the strong-performing property to its portfolio. “Parkway Center’s location is second to none. Its close proximity to
Fremont’s new city hall and civic areas along
with walking distance to BART make Parkway
an ideal asset for us to own and manage,”
says Russel Stanley, president of the Stanley
Office Property Likely to Give Way to Multifamily
BEHIND THE DEAL