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Asset Types in Private Equity Real Estate Deals

by Si Jia Li

  • 05 Jun 2017
  • PE

Preqin’s Real Estate Online tracks over 16,900 private equity real estate (PERE) deals completed since 2012, with an aggregate value of $938bn. As reflected in the chart below, office properties are the preferred asset type among fund managers, accounting for at least one-third of total deal value annually. The three largest single-asset transactions completed this year so far were for office properties: Northwood Investors’ $1bn acquisition of Ballantyne Corporate Park, located in the US, tops the list.

Industrial Properties Gain Traction
Industrial assets represent the second largest proportion of deal value in 2017 to date, constituting 15% of aggregate deal value. The three largest portfolio acquisitions globally, each valued above $1bn, were all for industrial assets: Blackstone Group and M7 Real Estate jointly invested $1.4bn in over 100 logistic assets in Germany, while AXA Investment Managers – Real Assets and DRA Advisors each acquired portfolios of industrial assets in the US valued at $1.1bn.

Niche Properties Attract Attention
The aggregate value of transactions for niche real estate assets (the largest component of the ‘Other’ category) has increased year on year, reaching a high of $11bn in 2016. An in-depth study of over 180 real estate fund managers conducted by Preqin at the end of 2016 (full results detailed in the 2017 Preqin Global Real Estate Report) found that 54% felt that there was more competition for assets compared to 12 months ago. Forty-two percent of surveyed managers had therefore altered their investment strategies, looking towards investments in higher-risk strategies or turning their focus to more niche assets or markets. This is reflected in the PERE deal landscape, where the proportion of aggregate deal value represented by niche properties tripled from 1.4% in 2015 to 4.9% in 2016.

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