NCREIF – INREV – ANREV · 2016-08-15 · real estate fund markets.. ... Other types of investor...

presented to NCREIF Membership

Released 4/1/16 introduction

The Global Capital Raising Survey 2016 explores capital raising activities by the non-listed real estate industry in 2015. The survey provides insights by region, product type, investment strategy, and where possible presents an historical comparison based on previous studies.

The 2016 survey represents the second year of global coverage. The study was conducted in conjunction with INREV in Europe and ANREV in Asia Pacific with the aim to provide a greater appreciation of trends in capital raising activities globally.

NCREIF

NCREIF – INREV – ANREV Global Capital Raising Survey Report 2016

Global Capital Raising Survey Report


I N T RO D U C T I O N

Execu ve Summary 2

Introduc on 3

Capital raising ac vity 4

Capital raised for the non‐listed real estate industry globally 7

Capital raised for a global strategy 14

Appendix: List of Par cipants 15

About NCREIF

Based in Chicago, the National Council of Real Estate Investment Fiduciaries (NCREIF) is the American association of institutional

real estate professionals who share a common interest in their industry. This includes investment managers, plan sponsors,

academicians, consultants, appraisers, CPA's and other service providers who have a significant involvement in institutional real

estate investments. They come together to address vital industry issues and to promote research. NCREIF acts as a non-partisan

collector, processor, validator and disseminator of real estate performance information, including several quarterly indices.

About INREV

INREV, the European Association for Investors in Non-listed Real Estate Vehicles, was launched in May 2003 to act for investors

and other participants in the growing non-listed real estate vehicles sector. The non-profit association is based in Amsterdam, the

Netherlands. INREV aims to create a forum for the sector and increase the transparency and accessibility of non-listed vehicles, to

promote professionalism and clarify best practice and to share and spread knowledge. INREV currently has 356 members drawn

from leading institutional investors, fund managers, promoters and advisors across Europe and elsewhere.

About ANREV

ANREV is the Asian Association for Investors in non-listed real estate vehicles, a not-for-profit organization based in Hong Kong.

ANREV's agenda is driven by the members, in particular the investors, and is focused on improving transparency and accessibility

of market information, promoting professionalism and best practices, sharing and spreading knowledge. Fund managers,

investment banks, lawyers and other advisors provide support in addressing key issues facing the Asian non-listed private equity

real estate fund markets.. ANREV is a sister organization to INREV in Europe and works with a number of associations across Asia

Pacific and North America on research and professional standards.


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E X E C U T I V E S U M M A RY

The Global Capital Raising Survey 2016 demonstrated that non-listed real estate remained in favour among

investors of all types last year. In particular, pension funds give non-listed real estate a resounding vote of

confidence in 2015. For the second consecutive year, NCREIF joined the European Association for Investors in

Non-listed Real Estate Vehicles (INREV) and the Asian Association for Investors in Non-Listed Real Estate Vehicles

(ANREV) to conduct this survey of global capital raising trends.

Collectively, respondents raised $134.8 billion for non-listed real estate in 2015, a slight decrease as compared

to 2014, which can partially be attributed to currency fluctuations.

The largest pool of capital, at $68.9 billion or 51.1% of the global total, was committed to real estate vehicles

with a European strategy. Vehicles with North American strategies represented 27.9% ($37.7 billion) with the

remaining 13.6% ($18.4 billion) of capital committed to vehicles with an Asia Pacific strategy.

There were two dominant investor types choosing to deploy new capital in 2015 – pension funds and insurance

companies. Other types of investor such as sovereign wealth funds and high net worth individuals are also

present, though their capital contributions were less significant.

European-based investors were most active, accounting for 48.7% of capital raised in 2015, followed by North

American investors with a contribution of 35.9% of the global total. Asia Pacific investors contributed the

remaining 15.4% of capital raised last year.

There are plentiful choices for investment structures within the non-listed universe, which includes non-listed real

estate funds, joint ventures, club deals, separate accounts (direct or indirect), debt products and funds of funds.

However, non-listed funds account for nearly half of 2015 activity by both fund count and value.


I N T RO D U C T I O N

The Global Capital Raising Survey 2016 explores capital raising activities into the non-listed real estate industry

in 2015. The survey provides insights by region, product type, investment strategy, and where possible presents a

historical comparison based on previous studies.

The 2016 survey represents the second year of global coverage. The study was conducted in conjunction with

INREV in Europe and ANREV in Asia Pacific with the aim to provide a greater appreciation of trends in capital

raising activities globally.

This global reach has improved the sample size. There were a record number of participants in the 2016 survey

with 153 fund managers completing the questionnaire, which is a 7.8% increase over the 142 fund managers

that responded to the survey in the prior year.

Collectively, respondents raised $134.8 billion for non-listed real estate investment. A majority of survey

participants agreed to be listed in this report, which is included in the Appendix.

The survey report contains three additional sections. Section 2 presents the general capital raising landscape

within the non-listed real estate industry. Section 3 comments on the total equity raised in 2015 as well as equity

raised by vehicle type, fund manager type and domicile. Section 4 discusses in greater detail the equity raised

for real estate vehicles with a global strategy.

It is important to note that the sample size and composition of the survey varies by year. What is more, when

‘Other’ is mentioned, the numbers may contain responses which were unspecified in the survey. Also worth noting

is that separate accounts were split in 2016 into two distinct vehicles: separate accounts investing directly into

real estate and separate accounts investing into indirect vehicles. As such, historical comparison should be treated

with caution.

Figures are quoted as of December 31, 2015.

NCREIF, INREV and ANREV would like to thank fund managers for their participation in the Capital Raising

Survey 2016.


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C A P I TA L R A I S I N G AC T I V I T Y

This section covers total equity raised for the non-listed real estate industry worldwide. It includes non-listed real estate funds, joint ventures, club deals, separate accounts (investing directly into real estate as well as investing into indirect vehicles) and non-listed debt products.

A clear majority (80.4%) of fund managers in this global survey indicated that they raised capital for non-listed funds, separate accounts, JVs and club deals, funds of funds and/or non-listed debt funds in 2015.

Interestingly, some geographical variations emerged among respondents. Of the 22 fund managers domiciled in North America, all respondents indicated that they have raised capital in 2015. Meanwhile, 78.8 % of European fund managers indicated that they have raised capital for non-listed real estate vehicles with the remaining 21.2% responded that no fresh capital has been attracted. Fund managers domiciled in Asia Pacific saw the lowest levels of capital raising activity with 73.9% of respondents indicated that they have received new capital in 2015 and the remaining 26.1% responding that no new capital was raised last year.

FIGURE 1: CAPITAL RAISING ACTIVITY IN 2015

The minority of fund managers reporting no new capital raised in 2015 were asked why, although nearly all (93%) responded with ‘Other’. In qualitative responses, those selecting ‘Other’ noted obstacles such as a lack of interest from investors, change in market conditions, and adjustment of an existing strategy, to raising capital in 2015.


Methods of capital raising The largest share of new equity that fund managers raised in 2015 was via their existing relationships with investors. It proved to be the most effective strategy translating into 66.0%, or $88.9 billion of fresh equity raised globally last year. The use of a placement agent was the least preferred route in raising new equity. Only 6.2% of all capital raised in 2015 was committed through placement agents.

FIGURE 2: METHODS OF CAPITAL RAISING

The importance of trust and a good relationship with investors is fairly consistent regardless of fund manager domicile. North American fund managers utilized their existing relationships the most with 81.6% of equity raised from established contacts. Among Asia Pacific fund managers, this number stood at 70.6%. European fund managers raised a majority of equity via existing relationships, although, at 52.9% of capital, this fell short of the other two regions.

FIGURE 3: METHODS OF CAPITAL RAISING BY FUND MANAGER DOMICILE


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Expectations for capital raising activities In overall terms, fund managers were optimistic when asked about their expectations for capital raising activities over the next two years. The majority (73.2%) of fund managers expect the trend to continue upwards. On the other end of the spectrum, a mere 7.8% consider that capital raising momentum will reduce in two years’ time. The remaining 17.6% of respondents project no change for capital raising activities, with only 1.3% being undecided.

FIGURE 4: EXPECTATIONS FOR CAPITAL RAISING ACTIVITIES


CAPITAL RAISED FOR THE NON-LISTED REAL ESTATE INDUSTRY GLOBALLY

Capital raising momentum continued for the non-listed real estate industry. In 2015, survey participants raised a total of $134.8 billion of new capital globally. Compared to levels achieved in 2014, this constitutes a decrease of 9.6% of capital being raised for non-listed real estate sector.

The largest amount of capital raised is destined for Europe with $68.8 billion, or 51.1%, targeting the region. North American vehicles attracted the second largest sum of $37.7 billion (27.9%) of all new equity raised last year. Asia Pacific is the target for $18.4 billion (13.6%) of new capital raised in 2015.

Among these three regions, capital raised for a North American strategy held up better on a year-over-year basis. In 2014, $41.9 billion of capital was raised with a North American strategy for a decline of 10.1% in 2015, while capital targeting Europe fell 16.4% and Asia Pacific focused capital fell 22.7%.

FIGURE 5: ANNUAL CAPITAL RAISED BY REGIONAL STRATEGY

With continued globalization of the non-listed real estate industry, a ‘Global’ strategy option for multi-regional allocations was included for the second time in the questionnaire. Of the total amount raised, 6.9% ($9.2 billion) was committed to vehicles with a global strategy. No capital was raised for vehicles with an African strategy. Those targeting South America represent only 0.5% ($600 million) of total capital raised in 2015.

The capital raised in 2015 involved 801 vehicles. Nearly 60% (or 479 vehicles) of these vehicles involve a European strategy. The total targeting North America was 159 vehicles (19.9%) and an Asia Pacific strategy is targeted by 126 vehicles (15.7%). There were 34 vehicles (4.2%) targeting a Global strategy.

It is interesting to note the interrelationship between capital raised by region and the number of vehicles. As noted, vehicles with a European strategy make up almost two thirds of all vehicles equity was raised for last year, but by value they comprise just over half of new equity being raised. While vehicles with a North American strategy represent one-fifth by number but almost one–third by value, suggesting that vehicles targeting North America are larger on average.


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FIGURE 6: VEHICLE SHARES BY REGIONAL STRATEGY

Examining investor domicile as well as regional targets shows that the largest proportion of capital is destined for domestic markets. North American fund managers raised the most diverse suite of capital last year with 58.6% of their capital raised destined to vehicles targeting their domestic market, which is low relative to fund managers located in Europe and Asia Pacific. European fund managers raised 83.5% of new equity for vehicles with a European strategy with 8.7% designated to Global vehicles, 6.1% to North America and 1.3% to Asia Pacific. Asia Pacific fund managers are targeting domestic markets with 69.1% of capital raised, while 25.5% was destined to a North American strategy, 4.8% to a European strategy and the remaining 0.6% with Global strategies.

FIGURE 7: CAPITAL RAISED BY REGIONAL STRATEGY AND FUND MANAGER DOMICILE


By vehicle count, domestic markets are a large portion of capital raised, but not always the majority. Of the 321 vehicles North American fund managers raised capital for last year, almost half (48.3%) are vehicles with a European strategy, while vehicles targeting domestic market comprise 38.9%. Asia Pacific strategies are next with 10.0% of the vehicle count. Asia Pacific fund managers raised capital for 104 vehicles of which 80.8% are targeting the Asia Pacific. European fund managers raised new capital for 376 vehicles and the majority (83.8%) are targeting Europe, followed by vehicles with North American (6.6%), Global (6.4%) and Asia Pacific (2.7%) strategies.

FIGURE 8: VEHICLE SHARES BY REGIONAL STRATEGY AND FUND MANAGER DOMICILE

Capital raised by vehicle type The Global Capital Raising Survey 2016 targets an ever expanding menu of non-listed real estate vehicles. The largest share of capital, as in previous years, was raised for non-listed real estate funds. In total, these funds represent 47.3% of all capital raised in 2015. Separate accounts investing directly in real estate were the second most popular vehicle, drawing 24.4% of all new capital. Joint ventures and club deals attracted 13.3%, non-listed debt products 9.0%, fund of funds 4.0% and separate accounts investing into indirect vehicles 2.0% of all capital raised in 2015, respectively.

FIGURE 9: CAPITAL RAISED BY VEHICLE TYPE


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This breakdown was further reinforced by the number of vehicles. There were 386 non-listed real estate funds for which capital was raised for in 2015, representing 48.2% of all vehicles. There were 206 (25.7%) separate accounts investing directly into real estate, for which capital was raised for last year. The remaining capital was raised for joint ventures and club deals (14.1%), non-listed debt funds (4.4%), separate accounts investing into indirect real estate (4.4%) and fund of funds (3.2%).

FIGURE 10: VEHICLE SHARES BY TYPE

The popularity of non-listed real estate funds is reaffirmed by looking at equity raised by vehicle type and by regional strategy. Of all vehicles targeting Asia Pacific, North America and South America, funds comprise more than half of all new equity raised in 2015.

For capital targeting North America, non-listed funds (55.9%) were the preferred vehicle, followed by separate accounts investing directly (18.2%). A significant proportion of capital was raised for JVs and club deals (18.0%), the highest proportion across all regions.

The largest share of new capital raised with a European strategy was also for non-listed funds, at 40.3%. Other significant vehicle types with a European strategy include separate accounts investing directly (28.0%), JVs and club deals (13.6%), and non-listed debt products (14.1%).

New capital targeting Asia Pacific was largely raised for non-listed funds (61.1%), followed by separate accounts investing directly into real estate (25.3%). JVs and club deals have a modest share of equity, at 9.9%, with the remaining vehicles at about 2% or less of total capital raised.

For vehicles pursuing a global strategy, the preferred vehicle type is either funds of funds (37.2%) or non-listed funds (35.2%). Fund managers targeting South America raised capital for non-listed real estate funds (76.7%) and separate accounts (23.3%) only.


FIGURE 11: CAPITAL RAISED BY REGIONAL STRATEGY AND VEHICLE TYPE

Capital raised by investor type Pension funds were the main source of capital for the non-listed real estate industry in 2015. They contributed 46.4% ($62.5 billion) of all new capital raised for the industry. Insurance companies (14.6%) and sovereign wealth funds (10.8%) were also considerable sources of capital for real estate investment. The remaining identified sources of equity were from government institutions (3.4%), high net worth individuals (2.6%), fund of funds (2.5%), and non-profits (1.5%).

FIGURE 12: CAPITAL RAISED BY INVESTOR TYPE


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Pension funds did constitute the largest share of new equity raised for all vehicle types in 2015. However, their weight differs across the various vehicle types. Pension funds were the source of more than half new capital raised in funds of funds (61.3%), separate accounts investing directly (55.5%) and non-listed debt products (54.8%). Non-listed real estate funds had 42.4% of new capital from pension funds, while a smaller share of new equity for JVs and club deals (37.9%) and separate accounts investing indirectly (35.4%) was represented by pension funds. Insurance companies were a prominent secondary source of capital, representing 29.5% of new equity for non-listed debt products, 23.7% for separate accounts investing indirectly, and 19.7% for separate accounts investing directly. Sovereign wealth funds were a significant secondary source of capital for JVs and club deals, at 27.8% of capital raised for that vehicle type.

FIGURE 13: CAPITAL RAISED BY INVESTOR AND VEHICLE TYPE


Capital raised by investor domicile Analyzing capital raised by investor domicile, European investors contributed the largest share of new equity raised in 2015. Of the $134.8 billion raised for the non-listed real estate industry, 48.7% was from European investors, 35.9% was from North American investors and 15.4% was from Asia Pacific investors. No equity was raised from South American and African domiciled investors.

FIGURE 2: CAPITAL RAISED BY INVESTOR DOMICILE

When examining capital raised by investor domicile and vehicle type, some interesting patterns emerge. Non-listed real estate funds were broadly distributed across European (42.9%), North American (36.7%) and Asia Pacific (20.3%) investors. For separate accounts investing directly and JVs and club deals, North American and European investors represent a nearly even split as the source for this capital with Asia Pacific investors accounting for about 12% of new capital for each vehicle. European investors dominated the remaining vehicle types of funds of funds (81.9%), non-listed debt products (72.1%), and separate accounts investing indirectly (66.0%). However, North American investors did represent a sizeable share of new capital for separate accounts investing indirectly (19.6%) and non-listed debt products (19.1%).

FIGURE 15: CAPITAL RAISED BY INVESTOR DOMICILE AND VEHICLE TYPE


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CAPITAL RAISING FOR GLOBAL STRATEGY

Vehicles targeting a Global strategy are defined as having no more than 90% of the vehicle’s gross asset value (GAV) invested in one region.

Global vehicles attracted $9.2 billion, or 6.9%, of all new capital raised in 2015. The largest proportion of capital for global vehicles came from pension funds, at 44.9% of the total. Sovereign wealth funds were the second largest contributor, committing 9.0%. The remaining identified sources of capital were from funds of funds (6.7%), high net worth individuals (5.6%), insurance companies (4.2%) and non-profits (3.2%).

FIGURE 16: CAPITAL RAISED FOR A GLOBAL STRATEGY BY INVESTOR TYPE

The most popular global vehicle type is fund of funds, at (37.2%) of new capital raised, followed by non-listed real estate funds, at 35.2%. Separate accounts represented the remaining vehicle types for capital with a global strategy with 22.2% of new capital for direct investing and 5.4% for indirect investing.

FIGURE 17: CAPITAL RAISED FOR A GLOBAL STRATEGY BY VEHICLE TYPE

35.2%

22.2%5.4%

37.2%

Non-listed funds

Separate accounts(direct)

Separate accounts(indirect)

Funds of funds


APPENDIX: LIST OF PARTICIPANTS

The following is a list of fund of funds managers and fund managers that have participated in the Global Capital Raising Survey 2016 and gave permission for their company names to be published:

a.s.r. reim aAlto invest Aberdeen Asset Management AEP Investment Management AEW Europe Altan Capital Altera Vastgoed NV AMP Capital Amundi Amvest Areim AB Ascendas Aviva Investors BlackRock Bluehouse Capital BNP Paribas REIM Bouwfonds Investment Management Bouwinvest Real Estate Investment Management (REIM) CAERUS Debt Investments AG Cairn Capital CapMan Real Estate Catella CBRE Global Investment Partners CBRE Global Investors LLC Challenger CITIC Capital Holdings Limited City Square REI Clearbell capital Cording Real Estate Group Cornerstone Real Estate Advisers LLC Credit Suisse Creditease Asset Management (Singapore) Pte Ltd Deutsche Asset Management DEXUS Property Group DNB Life Dymon Asia Real Estate Dynasty Investments / EZLand ECE Real Estate Partners S.à r.l. EG Funds Management Equity Estate BV Europa Capital LLP Fidelity International First Property Group Forum Partners FPA multifamily


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Franklin Templeton FREO Group Frogmore Global Logistic Properties Grosvenor Fund Management GTIS Partners Guggenheim Real Estate LLC Guidance investments Hahn Group Hannover Leasing Investment GmbH Heitman Helaba Invest Hines Hunter REIM IBUS Asset Management BV ICG-Longbow IGIS Asset Management ImmoFinRE Group InfraRed Capital Partners Intercontinental Real Estate Corp. Investa IPUT plc ISPT Pty Ltd J.P. Morgan Asset Management Jamestown Jensen Group KaiLong Investments Kenedix, Inc. KGAL GmbH & Co. KG Knight Frank Investment Management Kristensen Properties LaSalle Investment Management Legal & General Lend Lease Investment Management M&G RealEstate Madison International Realty Mapletree Investments Mitsubishi UFJ Trust and Banking Corporation MOMENI Investment Management GmbH Morgan Stanley Real Estate Investing Niam AB Nomura Real Estate Asset Management Nordika Fastigheter AB Northern Horizon Capital Orion Partners Real Estate Group PAG Real Estate Palatium Investment Management Palmer Capital Pamfleet Partners Group PATRIZIA Immobilien AG Pramerica Real Estate Investors Limited PROJECT Investement AG Prologis


Quadrant Real Estate Advisors Quantum Immobilien KVG Rockspring PIM Rynda Property Investors LLP Sarofim Realty Advisors Savills Investment Management SC Capital Partners SCOR Investment Partners Sentinel Real Estate Corporation Sirius Capital Partners Sonae Sierra Sparinvest Property Investors Starwood Capital Group Steen & Strøm AS Syntrus Achmea Real Estate & Finance TH Real Estate The GPT Group - Funds Management Tishman Speyer Tokyo Tatemono Investment Advisors Co., Ltd. Trevian Asset Management Oy Tristan Capital Partners TRIUVA Kapitalverwaltungsgesellschaft mbH UBS AG Valad Europe Vesteda Investment Management VinaCapital Warburg-HIH Invest Real Estate GmbH Waterton White Peak

For questions about this report you may contact:

NCREIF – Sara Rutledge, Director of Research

(312) 819-5890 or via e-mail at [email protected]

NCREIF – INREV – ANREV · 2016-08-15 · real estate fund markets.. ... Other types of investor...

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Transcript of NCREIF – INREV – ANREV · 2016-08-15 · real estate fund markets.. ... Other types of investor...