care REIT HCP Inc. has
named Lauralee Martin,
formerly Americas CEO at
Jones Lang LaSalle, as its
president and CEO. Martin,
a member of HCP’s board
since 2008, has been succeeded at JLL by
president and CEO Colin Dyer.
office buildings may need less space but
more bathrooms and parking. But if a
buyer holds that asset too long, I guarantee you that someone is going to buy the
building next door.”—Rayna Katz
BY THE NUMBERS
PE’s Dry Powder
NEW YORK CITY—Although dominated by
800-lb. gorillas such as the Blackstone
Group, private equity’s participation in
commercial real estate doesn’t end with
them. As of August, US-focused private
real estate fund managers had an aggregate $98 billion in equity available for
investments in new opportunities, compared to $79 billion this past December.
So says Preqin in a new report, which
also shows that the funds spent almost as
much in 2012 ($67 billion in equity) as
they did at the market’s peak in 2007
($68 billion that year). Further, private
equity’s CRE assets under management
reached an all-time high of $335 billion
as of this past December.
In large measure, this expansion is
due to the greatly improved outlook for
fundraising. While year to date, 2013 has
seen only 64 US-focused funds reach a
final close, “the aggregate capital raised
by these funds is $33 billion, representing 83% of the capital raised in the whole
of 2012,” according to Preqin. During
the same time frame in 2012, 66 funds
closed with just $17 billion among them.
This ramping-up of fundraising represents “encouraging news for the private
real estate industry in the US” and indicates “improving confidence in the country from institutional investors,” the
Preqin report states. However, current fundraising levels are still “well below” the heights reached in 2008, when 146
US-focused private funds closed, raising an aggregate $71 billion.
The growth of the private equity industry has meant “a rise in the
number of fund managers actively investing in the US,” and “an increas-
ingly crowded and competitive fundraising market,” according to
Preqin. “The level of experience among these managers varies consider-
ably, and the top-heavy nature of the industry is evident in the fact that
only a small number of fund managers are able to raise very large
amounts of investor capital.”
Given Blackstone’s dominance in the sector, it’s not surprising that the
largest US-focused fund to close between 2012 and August of this year was
Blackstone Real Estate Partners VII, which raised $13.3 billion, a new
record. Preqin says the 10 largest funds to close in this time period raised
a total of $38 billion, which represented 52% of the total. “This further
illustrates the importance of a handful of key players.”—Paul Bubny
BEHIND THE DEAL
CRE Power Quad Makes $1.3B Purchase
NEW YORK CITY—Seeing appeal both in its current and possible future incarnations, a
joint venture between Oxford Properties, Vornado Realty Trust, Crown Acquisitions
and Highgate Holdings—together with institutional investors advised by J.P. Morgan
Asset Management—recently acquired 650 Madison Ave. for $1.3 billion. The
Carlyle Group was the seller. Eastdil Secured’s senor managing directors Adam
Spies and Douglas Harmon acted as
exclusive broker in this transaction.
The 27-story, 594,000-square-foot
class A office tower, located on the
full western block front of Madison
Avenue between 59th and 60th
streets. The property contains
523,000 square feet of office space
and 71,000 square feet of retail space.
The office space is the world headquarters for Polo Ralph Lauren, which
occupies 274,000 square feet. The
retail space is primarily leased to Crate & Barrel for its 61,400-square-foot flagship
Manhattan store, and to Tod’s, a shoe and leather goods specialty store spanning
7,900 square feet.
The building likely generated interest from four leading commercial real estate firms
because not only is it a trophy asset in its current configuration, it also has great
potential for other uses, says Oxford senior managing director Andrew Trickett.
“It’s a unique asset with unique optionality,” he says. “As an existing asset it fea-
tures world class retail and a class A office building. Long-term, there’s a residential
optionality because of our park views and our as-of-right ability to build. It’s a great
It would be premature to say just how high the building could go, Trickett notes,
and he was uncertain of just how far into the future such a long-term plan might be
put into place. He declined to say just how much of the building Oxford now owns.
The companies also all came on board because of a shared history, he says. “We
have a co-investment with Crown at Olympic Tower, which we acquired last year,
and many of the companies have looked at doing deals together, so there are a lot
of relationships between people from the different firms.”—Rayna Katz
650 Madison Ave.