TOP 100 INVESTORS: The leading dealmakers in Europe

PropertyEU's latest edition of Top 100 Investors analyses the latest moves by the biggest dealmakers in the European real estate industry.

Jos Short can always be relied on for a colourful quote. In a recent interview with PropertyEU, the founding chairman of Internos Global Investors likened the European real estate industry to a jungle and Blackstone to a gorilla in that jungle.’ ‘In fact,’ he said, ‘I would say it’s a silverback gorilla – the most dominant of them all.’

Short’s analogy neatly sums ups the aggressiveness and weight of capital that Blackstone has brought to the European real estate industry in the past few years. The New York-listed company is one of the biggest winners in our Top Investors ranking this year with €17 bn of AUM in Europe as of end-2013, up from just €7 bn a year earlier. The figures are estimates as Blackstone does not publically break down its investments by geographical market. Worldwide, the company had real estate AUM of $80 bn as of end-June 2014 and $279 bn overall.

BlackRock is also making waves in Europe after taking over MGPA in 2013. One of the world’s biggest asset managers, the New York-listed company had a relatively small property presence on this side of the Atlantic until that acquisition, but now has €7.5 bn of real estate AUM in Europe.

A US heavyweight is also one of the drivers behind the new global powerhouse TIAA Henderson Real Estate which was officially launched in April 2014. Under the joint venture, US asset manager TIAA-CREF has brought in its existing European real estate business with London-based Henderson Global Investors’ European and Asia-Pacific property operations. The new joint venture was not yet effective by the end of 2013 and was therefore not eligible for this year’s ranking, but is due to be one of the biggest winners in the 2015 edition.

INVESTMENT MANAGERS
Across Europe, some of the larger real estate fund and investment players are making moves to strengthen their position in their home market and/or other European countries. The UK has spawned the largest number of truly large winners in the past 12 months, headed by Aberdeen Asset Management following its takeover of Scottish Widows Investment Partnership. The Aberdeen-SWIP tie-up has boosted the combine’s assets under management by more than 30% to a pro-forma figure of roughly €30 bn. While Aberdeen is active across Europe, the combined group has predominantly boosted its position in the UK market and was prompted more by a wider strategy to consolidate its overall asset management activities than to become a big player in real estate.

By contrast, the joint venture between Henderson Global Investors and TIAA-CREF is exclusively focussed on their real estate activities. The resultant combine – TIAA Henderson Real Estate – which came into force in April this year, is a new global giant in the real estate universe spanning Europe, the US and with a promise to expand in Asia.

France also boasts a couple of big winners. Leader of the pack is BNP Paribas Real Estate, which has bolstered its position in the German market following the acquisition of iii -investments in 2013. The move has increased its AUM by almost 40% year-on-year. Its smaller French peer La Française Real Estate Managers has made a similar stride in the past two years and now has AUM of around €10 bn following its alliance with London-based Forum Partners in 2013 and its takeover of Cushman & Wakefield Investors earlier this year. But the biggest coup so far this year was Swiss Life’s takeover of German asset manager Corpus Sireo. If approved, the move will double the Swiss insurer’s platform to €36 bn.

LISTED SECTOR
France has also set the pace so far this year for the consolidation of its listed real estate sector. In July, French retail heayweight Klépierre repeated the feat carried out by its larger peer Unibail in 2007 when it acquired a smaller Dutch competitor to expand its European presence. Unibail-Rodamco remains the largest listed retail REIT in Europe – and indeed, the largest listed real estate company overall with €32 bn of AUM – but Klépierre has moved closer since its takeover of Amsterdam-listed Corio. While the merger still awaits final approval, the procedures to create another listed retail giant with roughly €21 bn of AUM are on track.

Germany, meanwhile, leads the way – along with Spain – for a large number of new IPOs, particularly in its residential sector with the likes of Gagfah, LEG Immobilien and Deutsche Annington seeking a listing in Frankfurt in recent years. But consolidation is also rampant in this market: one of the newcomers – GSW Immobilien – has now been gobbled up by its larger listed peer Deutsche Wohnen to create one of the biggest residential specialists in the country. Patrizia Immobilien likewise has strong roots in the residential sector, but is clearly broadening its focus, both in terms of geography and sectors. The company has doubled its assets under management in the past three years and continues to grow, both at home and abroad.

The UK has also seen a spate of smaller IPOs in recent years, but the listing of Kennedy Wilson Europe Real Estate in February this year – generating more than €1 bn in proceeds – set a new standard. In just three years, the California-based company has created an entity with overall assets under management of €3.6 bn, earning it a position at number 95 in our ranking.

BOUTIQUE FIRMS
So far this cycle, US players of the likes of Blackstone, Lone Star and Starwood have dominated the opportunistic real estate arena in Europe and their numbers continue to grow. Indeed, they seem to have replaced Morgan Stanley, Goldman Sachs and the large US investment banks which called the shots until the onset of the financial crisis. After some of their funds were virtually wiped out by heavy losses, investors have become far more critical and now look for managers with proven records.

Of the established boutique firms, Orion Capital Managers has been one of the most successful in the current cycle. After raising €1.1 bn in the dark days of the crisis in 2009, it repeated the feat in 2013 with a new €1.3 bn fundraise. Despite this success, Orion does not have set targets and is loathe to be defined by its € 3.5 bn of AUM. As Aref Lahham, one of the three founding directors put it in an interview with PropertyEU earlier this year: ‘Orion is not an AUM shop, we’re a performance shop. We don’t believe we’re defined by AUM. Size is nothing.’

By contrast, Tristan Capital Partners is seeking to be both an AUM and performance shop. Founding director Ric Lewis has a drive and ambition that matches his towering physical stature. Under his leadership, Tristan has gone from strength to strength in the five years since it was founded in 2009 – in what some people would describe as the ‘stupidest’ time to set up a business. According to market reports, Tristan is now planning another €1 bn fundraise in 2015.

Internos Global Investors is also a winner of the crisis and has built up a strong asset management platform since its launch in 2008. But the next phase will be all about fund management, the company’s founders Jos Short and Andrew Thornton have promised.

Judi Seebus
Editor-in-chief