The largest 30 private equity real estate firms in by rub18840


									                             PE RE 30
                       The largest 30 private equity real estate firms in the world

     The past year may have seen fundraising slow to a trickle for most private equity real estate firms, however
     industry heavyweights are still pulling their weight when it comes to raising value-added and opportunistic
     capital, according to the 2009 PERE 30.

     For the second year running, PERE magazine has produced its ranking of the 30 largest private equity
     real estate firms in the world.

     Tracking direct-investment capital raised for blind pool, dedicated private equity real estate funds since
     January 2004, the 2009 PERE 30 reveals that the largest 30 firms raised a total of $211.9 billion over the past
     five years. That compares with $190 billion raised between 2003 and 2008, as calculated by last year’s list.

     The line-up of the top 30 firms though has not remained static. Of the 24 firms that reappeared in the
     top 30 list from last year, 12 fell one or more positions compared with 2008 and four remained static –
     including the firms in first and second position.

     Some firms managed to close sizeable fundraisings, which boosted their respective ranks significantly,
     or allowed them to debut on the top 30 list. A total of eight firms increased their standing in the ranking,
     while six new firms entered the field for the first time.

     As in prior years, the PERE 30 is based on the amount of private equity real estate direct investment capital raised
     over a five-year period. See for greater detail on the PERE 30 methodology.

     All fundraising totals are calculated in US dollars. Where funds were raised in non US-dollar currencies,
     we have taken the amount of capital raised in its original currency and converted it on 21 April using the
     following rates: $1 = €0.77; £0.68; ¥98.66; C$1.24.

     And now without further ado, we present the PERE 30 …

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PE RE                                                                                                             2009
     THE PERE 30
     2009                                                                                          CAPITAL             2008
     RAnk         nAmE of fIRm                                           HEAdQUARTERS              RAISEd ($bn)        RAnk

     1            The Blackstone Group                                   New York                  $25.60                1

     2            Morgan Stanley Real Estate Investing                   New York                  $20.15                2

     3            Goldman Sachs Real Estate Principal Investment Area    New York                  $13.58                4

     4            Colony Capital                                         Los Angeles               $11.56                5

     5            Beacon Capital Partners                                Boston                    $9.75                 9

     6            Lehman Brothers Real Estate Partners                   New York                  $9.35                 6

     7            LaSalle Investment Management                          Chicago                   $9.05                10

     8            Tishman Speyer                                         New York                  $8.70                 3

     9            The Carlyle Group                                      Washington DC             $8.21                 7

            *     Westbrook Partners                                     New York                  $6.74                 ―

     11           MGPA                                                   London                    $6.31                11

     12           CBRE Investors                                         Los Angeles               $6.12                15

     13           AREA Property Partners                                 New York                  $6.08                14

     14           Rockpoint Group                                        New York                  $5.56                13

            *     Prudential Real Estate Investors                       Parsippany (New Jersey)   $5.39                 ―

     16           Lubert-Adler Real Estate                               Philadelphia              $5.24                26

     17           KK daVinci                                             Tokyo                     $5.20                25

     18           RREEF Alternative Investments                          New York                  $4.71                16

     19           Walton Street Capital                                  Chicago                   $4.70                22

            *     Hines                                                  Houston                   $4.25                 ―

     21           Citi Property Investors                                New York                  $4.10                20

     22           Grove International Partners                           London                    $4.03                17

     23           The JBG Companies                                      Chevy Chase (Maryland)    $3.98                19

     24           Shorenstein Properties                                 San Francisco             $3.94                18

            *     Angelo, Gordon & Co.                                   New York                  $3.78                 ―

     26           JER Partners                                           McLean (Virginia)         $3.38                21

            *     AXA REIM                                               Paris                     $3.24                 ―

     28           Heitman                                                Chicago                   $3.21                23

            *     DRA Advisors                                           New York                  $3.00                 ―

     30           Starwood Capital                                       Greenwich (Connecticut)   $2.95                27

     Legend:      Higher rank than 2008           Lower rank than 2008       Same rank as 2008
                                                                                                   *   PERE 30 debut

PE RE                                                                                                            2009

     PERE 30 methodology
     Ranking the largest private equity real estate firms in the world rules strict rules and
     judgment in this non-transparent asset class. Here we present our methodology for
     the PERE 30.

     After unveiling the first ever PERE 30 last year, we         is counted in determining the PERE 30 rankings, as
     were inundated with questions as to why, and how,            described below.
     we compiled the ranking.                                       The PERE 30 only measures capital raised or
       The answer to the first question is quite simple:          formed within the most recent five-year window
     people love lists. Over the years that we’ve been            for dedicated, direct-investment private equity real
     covering the real estate and private equity industries,      estate programmes.
     we have received numerous phone calls from people
     who want to know who the largest players in the              How we determine the 2009 rankings:
     industry are.                                                The 2009 PERE 30 rankings are based on the amount
       That brings us to the second question: how we              of private equity real estate direct-investment capital
     compile our list. When we first contemplated ranking         raised over a roughly five-year period leading up to
     private equity real estate firms there were a number of      press time. This year, the rough five-year window
     ways we could have approached the issue, including           spans from January 1, 2004 until April 24, 2009, just
     measuring a firm’s assets under management and               before the May 2009 issue of PERE goes to press.
     the value of the undrawn capital committed to its            Last year’s rankings were also drawn from a 64-month
     funds.                                                       window, but of course last year the window started
       By assessing a firm according to the amount of             January 1, 2003 and ended mid-April, 2008.
     private equity real estate direct investment capital it         In coming up with our key “2009 PERE 30 Five-Year
     has raised over a five-year period, we believe PERE          Fundraising Total”, upon which the PERE 30 rankings
     magazine has come up with a powerful apples-to-              are based, we rely on the most accurate information
     apples methodology for measuring size that takes into        available to answer this question of each firm: How
     account a firm’s heft going forward while indicating the     much private equity direct-investment capital has the
     scope of its recent investment activity.                     firm raise since January 1, 2004?
                                                                     Where two firms have raised the same amount of
     What is the PERE 30?                                         capital over this time period, the higher PERE 30 rank
     The PERE 30 is a ranking of private equity real estate       goes to the firm with the largest active pool of capital
     firms globally by size. It began in 2008 following the       raised since 2004 (i.e., the biggest single fund). If there
     success of the PEI 50, which ranked private equity           is still a “tie” after taking into account size of single
     firms. Both the PERE 30 and PEI 50 are produced by           fund, we give greater weight the firm that has raised
     PEI Media, the publisher of PERE and Private Equity          the most capital within the past one or two years.
     International magazine.
        The PERE 30 is the only apples-to-apples comparison       Accuracy, confidentiality:
     of dedicated, direct-investment private equity real estate   We give highest priority to information that we receive
     programmes. The PERE 30 is not a performance ranking,        from or confirm with the private equity real estate firms
     nor does it constitute investment recommendations. The       themselves, often on background. When the private
     PERE 30 includes private equity real estate firms with       equity real estate firms themselves confirm details, we
     varying structures and strategies around the world. While    seek to “trust but verify”. Some details simply cannot
     the list is mostly made up of private equity real estate     be verified by us, and in these cases we defer to the
     firms that manage private equity limited partnerships, it    honour system. In order to encourage cooperation
     also includes firms with multiple strategies and business    from private equity firms that might make the PERE
     lines and firms with publicly traded vehicles. However,      30, we do not disclose which firms have aided us on
     only a defined type of private equity real estate capital    background and which have not.

PE RE                                                                                                                   2009

        Lacking confirmation of details from the firms themselves,   • Private equity: we do not count capital raised for
     we seek to corroborate information using available the          primarily private equity (i.e. operating business-
     firms’ own websites, press releases, news reports, third-       focused) strategies. Many private equity real estate
     party databases, limited partner disclosures, etc.              firms will invest in operating businesses, but their
                                                                     primary focus is on property investment.
     To help answer this question – How much private equity          • Infrastructure: we do not count capital raised for
     real estate capital has the firm raised since January 1,        primarily infrastructure investment strategies.
     2004? – some definitions are in order.
                                                                     • Structured debt: we do not count capital raised for
     • “Private equity real estate”: The definition of private       any collateralised bond obligation or debt obligation
     equity real estate, for the purposes of the PERE 30,            programmes.
     means equity capital raised for a dedicated program of
     investing directly into property, primarily. The capital is     • Debt investment funds: we do not count debt
     raised primarily in blind-pool limited partnerships. These      investment funds, including mezzanine debt.
     investment programs are further distinguished in that they
     do not primarily pursue what is often described as “core”       What counts as “capital raised?”
     or “core-plus” investment strategies, but rather “private
     equity,” “opportunistic” and/or “value-added” strategies,       • Limited partnerships: in most cases, private equity
     primarily. The fund managers primarily do not seek to           real estate firms raise money through commitments to
     own the assets in perpetuity but to eventually exit them,       limited partnerships. In some cases, investment capital is
     realizing a capital gain and generating an internal rate of     raised in other ways, for example through contributions
     return for the fund and its investors. Within the private       from an affiliated entity. In all these cases we have
     equity real estate market there are certainly gray areas        sought to accurately determine how much investment
     with regard to strategy definitions, but PERE will took         capital has been created for the financial sponsor in
     pains to ensure that the capital counted for the purposes       question over the specified five-year period.
     of the PERE 30 fell within our definition of “private equity
     real estate” to furthest extent possible.                       • Co-investment capital: where possible and
                                                                     appropriate, we count LP co-investment vehicles
     • “Capital raised”: This means capital definitively             as well as opportunistic LP co-investment capital
     committed to a private equity real estate direct                raised by private equity real estate sponsors. This
     investment fund. In the case of a fundraising, it means         co-investment capital must be invested alongside a
     the fund has had a final or official interim close on or        primary limited partnership, not established for a one-
     after January 1, 2004. The full amount of a fund if it          off deal or separate account.
     has close on or after this date may be counted. The               In deals where multiple sponsors have raised co-
     full amount of an interim close (a real one, not a “soft-       investment capital, we only counted the firm’s pro-
     circle”) that has occurred recently, even if no official        rata share of the co-investment capital raised (in other
     announcement has been made, may also be counted.                words, if a firm and three other firms raise $1 billion in
     We also count capital raised through other means,               LP co-investment capital for a deal, no firm is allowed
     such as co-investment vehicles and deal-by-deal co-             to count the whole $1 billion for itself).
     investment capital and earmarked annual contributions
     from a sponsoring entity. Further rules are below.              • Affiliated programmes: we counted private equity
                                                                     real estate capital raised by affiliated entities so long as
     What does not count as “private equity real estate”?            the firm has control over those entities, or the vehicles
                                                                     raised bear the clear branding of the firm.
     • Funds of funds: in the case of a primarily fund-of-
     funds programme, we only count direct investment                • Contributions from sponsoring entities: where a larger
     capital raised, if any.                                         entity has earmarked capital to a firm for a dedicated, direct
                                                                     private equity real estate program, we counted the amount
     • Separate accounts                                             of capital a firm drew down from that entity for direct private
                                                                     equity deals over the defined five-year period.

PE RE                                                                                                              2009

        By the numbers
        LInIng UP THE fIgURES
        A graphic representation of the 2009 PERE 30 shows two firms have raised disproportionately large
        amounts of captial over the past five years, followed by a more gradual reduction in the amount of value-
        added and opportunistic real estate capital raised. For a full explanation of the methodology used, see www.

                               The Blackstone Group

                Morgan Stanley Real Estate Investing

 Goldman Sachs Real Estate Principal Investment Area

                                      Colony Capital

                             Beacon Capital Partners

               Lehman Brothers Real Estate Partners

                    LaSalle Investment Management

                                    Tishman Speyer

                                   The Carlyle Group

                                 Westbrook Partners


                                     CBRE Investors

                             AREA Property Partners

                                    Rockpoint Group

                     Prudential Real Estate Investors

                            Lubert-Adler Real Estate

                                          KK daVinci


                               Walton Street Capital


                              Citi Property Investors

                                 Grove International

                                 The JBG Companies

                             Shorenstein Properties
                                                                                                                             Source: Private Equity Real Estate

                               Angelo, Gordon & Co.

                                        JER Partners

                                           AXA REIM


                                       DRA Advisors

                                   Starwood Capital

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

                                                                Capital raised over last five years ($bn)

PE RE                                                                                                                                                                                2009

                            TRAnSACTIon PowER of THE ToP 6                                                      PRoPERTY PowER of THE ToP 6
                            The PERE 30 firms bought and sold more than                                         The PERE 30 firms traded more than 14,100
                            $530 billion of property between January 2004 and                                   properties over the past five years, according to
                            mid-April 2009, according to Real Capital Analytics.                                Real Capital Analytics. Blackstone was in the lead
                            Blackstone and Morgan Stanley were the most active                                  buying and selling 1,892 properties, followed by
                            firms with more than $147.2 billion of transactions                                 Grove International on 1,498 properties. Here we
                            alone. Here we present the top 6 firms. *                                           represent the top 6 firms. *

                                                                                  Blackstone                                                                     Blackstone, 1,892 properties

                                                                                                                                                                                    Grove International
                                                                                                                                                                                    1,498 properties

                                                                                               Morgan Stanley

                                                                                                                                                                                        Lehman Brothers
                                                                                                                                                                                        1,150 properties

                                                                                           Tishman Speyer
                                                                                                                                                                                 RREEF, 869 properties

                                                                                  Lehman Brothers
                                                                                                                                                                         Macquarie Group, 848 properties
                                                  RREEF                           $43.5 bn
                                                             Goldman Sachs                                                                                   Goldman Sachs, 711 properties

                            Source: Real Capital Analytics                                                      Source: Real Capital Analytics

                            SECToR foCUS                                                                                  PERE 30 VS. PEI 30
                            PERE 30 firms dealt primarily with office and retail                                          PERE 30 firms raised more than $212 billion in
                            properties over the past five years, according to                                             funds over the past five years compared to $647
                            Real Capital Analytics.                                                                       billion raised by the top 30 private equity firms over
                                                                                                                          the same period.
                                           26%     26%
     % of transactions by sector by
       PERE 30 Jan 04 - April 09

                                      20                                                                                                                                              $647 bn
                                      10                                           9%                                     $
                                                                    19%                                                                      $190      $212 bn
                                                                                 6%        5%
                                                  Retail Industrial       Apt     Hotel   Dev site                                     0    100 200 300 400 500 600 700 800
                                                                  Sector focus

                            Source: Private Equity Real Estate                                                            Source: Private Equity Real Estate and Private Equity International

              * Data provider Real Capital Analytics has tracked the volume and value of property transactions for the PERE 30 firms from 1 January, 2004 to the beginning of April 2009.
              It covers activities by the parent companies, as well as by a firm’s dedicated private equity real estate funds.

36                PRIVATE EQUITY REAL ESTATE MAY 2009
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