Asia and Europe: Two Ways to Play Private Equity Real Estate
March 5, 201323m 48s
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Show Notes
MGPA Head of Asset Management-Asia, Hugh Andrew discusses:
- Story behind inception - James Quille - management buyout of Lend Lease Corporation's Global Property Investment fund unit in February 2004 - early stage PE tumult of fundraising - track record - cashflow;
- AUMS - Asia / Europe footprint - breakdown;
- Identity investors - time frame for holding - retention rates - 're-ups';
- Broad PE RE industry challenges - global financial crisis:
> Changes to fund structuring terms - extent of pressure it placed on PERE fund terms - concentrated focus on fund management fees - shorter fund terms - cash returns and not management fee waivers - pressure to structure fees?
> Regulatory reforms playing a bigger role - Liquidity and oversight rules - contrast with compliance costs - extent to which investors willing to compromise;
> Regulations that impact the real estate funds industry - Dodd-Frank Act - Alternative Investment Fund Managers (AIFM) Directive - AIFM (Non-EU-based platforms) - Basel III - etc;
> Potential accounting changes - Fair value implications - how rental income, real estate taxes, operating expenses, property level debt, etc. shown on the financial statements - contrast with current investment company model;
- Investing philosophy - 'above-average returns' - details;
- Investing proposition for European assets - classes - countries details;
- Europe Issues - liquidity surfeit (Draghi ‘whatever it takes’) - massive unemployment - distressed asset opportunities - sovereign rating downgrades - etc;
- Asia issues: countries - strategy - details - Dynamics: middle class - urbanisation - population boom - rising affluence - changing taste patterns - central bank flush cash - record-low rates, massive liquidity;
- Inflation - property curbs - China, Singapore and to lesser extent Malaysia - implications.
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