DEALS Q1: US investors lead inter-regional charge into European property

US investors led the acquisition drive by inter-regional equity of European real estate during the first quarter of 2014.

PropertyEU Research tracked 30 transactions of €20 mln-plus by US players from January to end-March 2014. Together, the combined transaction volume came to €5 bn.

Middle Eastern investors invested around €2.4 bn in the market, if Kuwait's acquisition of More London for €2 bn which was announced at the turn of 2013 is included.

The list of US buyers is dominated by the large private equity firms looking for distress or value-add opportunities. Dallas-based Lone Star Funds was the biggest spender of the US pack with the acquisition in February of Coeur Défense - the largest office building in Europe - out of a busted CMBS structure for €1.3 bn.

Vehicles managed by New York-listed private equity firm Blackstone carried out at least four large real estate transactions, totalling €1.1 bn, in Europe during the first quarter. In the logistics sector, Blackstone acquired three platforms in Germany from Credit Suisse for over €100 mln in January. And in the last weeks of the review period Blackstone paid €473 mln to French REIT Fonciere des Regions for a portfolio of 17 logistics sites in France and Germany.

Blackstone also expanded its office and retail holdings during the first three months of the year. In February it took over four Dusseldorf offices from Portigon, which manages properties formerly owned by West LB bank for €350 mln. In a sign to other investors that Italy should be back on their investment radars, Blackstone acquired five office and retail assets in the market for €180 mln.

The list of other big US investors includes real estate stalwarts Hines; Apollo Global Management, Morgan Stanley, Kennedy Wilson, Pramerica, Perella Weinberg and CBRE Global Investors.

NEW OPPORTUNISTS
Some relatively new names also made their debut in the European real estate investment market in Q1. The largest deal involved Mount Kellett Capital Management, a New York-based opportunistic investor founded in 2008 by two former Goldman Sachs executives. The firm manages about €7 bn from offices in New York, Dallas, Hong Kong, London, Mumbai, and Mauritius.

During February, Mount Kellett teamed up with local partner Sectie5 to acquire 10 shopping centres in the Netherlands from Corio at a discount approaching 30%. Amsterdam-listed Corio sold the small-to-medium sized, non-core shopping centres in the Netherlands and one in France for €213 mln as part of the realignment of its portfolio.

Northwood Investors, another New York-based privately held real estate investor, had popped up the month before to help AXA Real Estate wind down its 2001-vintage European Industrial Partnership (EIP). Northwood acquired the Spring portfolio of 10 industrial assets in France from the fund for an estimated €117 mln.

Northwood has raised $3.5 bn to invest in a range of real estate assets since it was founded in 2006 by John Kukral, a former president and CEO of Blackstone Real Estate Advisors. Another newcomer, US billionaire Seth Karman's Bauport Group, was part of a joint venture that acquired seven shopping centres and a retail park in Spain's Alicante region from Dutch listed player Vastned for €160 mln.