The real estate investment world is in flux as a newer group of managers — some with private equity roots — are gobbling up market share.
Winners and losers among managers are being defined largely based on performance during the Great Recession.
But the change is a boon for institutional investors, which are gaining fee breaks and other concessions as the managers fight for assets.
Some of the biggest real estate managers that have had the easiest time raising new funds this year, including Blackstone Group LP, Brookfield Asset Management and Starwood Capital Group, were little known in institutional circles a decade ago.
Indeed, in less than half that time, the ranks of the largest real estate managers of U.S. institutional tax-exempt assets have begun to shift, with these relatively new entrants taking their place among the real estate investment firms that have been managing institutional assets for decades.
For example, Starwood Capital's assets managed for U.S. tax-exempt institutions have nearly doubled since June 30, 2009, to $10.5 billion, according to data collected for this year's Pensions & Investments' survey of largest real estate money managers. Blackstone managed $63.9 billion in total worldwide real estate assets as of June 30, with an estimated $21.3 billion for U.S. tax-exempt institutions, according to data provided to P&I by Blackstone. By comparison, Blackstone managed a total of $7.95 billion as of June 30, 2009, according to Securities and Exchange Commission filings.
“Consolidation has happened already. From my point of view, I see a fair number of new funds being raised and launched, and there are the haves and have-nots,” said Peter Rogers, investment consultant, real estate, at Towers Watson Investment Services Inc. in New York. “Fundraising is as hard as it has ever been. More consolidation is to come, but time will tell.”
One example of that consolidation occurred in September when Carlyle Group, Washington, bought New York-based real estate funds-of-funds manager Metropolitan Real Estate Equity Management.