When BlackRock Owns Your Report Card

When BlackRock Owns Your Report Card

Preqin, whose rankings on fund performance can make or break RE managers, is being bought by BlackRock for $3.2B, in an all-cash deal that makes Larry Fink an Anna Wintour-type figure in the world of private real estate.

“We believe we could index the private markets,” Fink said after the deal was announced. “Just as index has become the language of public markets, we envision we could bring the principles of indexing even iShares to the private markets.”

One Q worth considering: How willing will RE fund managers be to open the books to a company now controlled by one of their most fearsome competitors?

Brought to you by: BetterPitch

If you’re in the real estate business, you’re in the capital raising business. And central to a successful fundraise is a professional pitch deck, built by marketing experts who understand the industry intimately. Enter BetterPitch.

After $3B+ in deals facilitated, BetterPitch is expanding into full-service marketing: branding, websites, investor materials, ad campaigns, content creation, and more. Readers of The Promote get unlimited revisions on your materials until you’re 100% satisfied. Get started today.

BlackRock-Preqin (cont.)

Preqin ($240M est. ARR in ‘24) is a data behemoth: It covers 190K funds, 60K fund managers and 30K private markets investors. In real estate, it holds a prestigious perch: consistently placing among top-quartile funds makes you a darling of mega LPs (sovereigns, pensions, lifecos etc.), who use Preqin as a barometer of reliability. The biggest fund managers routinely cite Preqin data in their investor presentations. Other bidders for the company included the London Stock Exchange Group and S&P Global, per Reuters. What’s wild is that when the FT first reported last month that Preqin was being shopped around, valuations of $1.3B+ were tossed around – Preqin ultimately sold for nearly $2B more than that. 🤯 

BlackRock expects the overall alternative assets market to surge to nearly $40T by 2030, and with that growth will come a leap in demand for solid data. But let’s see how the world’s largest money manager’s ownership of Preqin impacts RE rivals’ willingness to share – as of end ‘23, BlackRock managed $28B of RE assets. 🍿 

Some Towers Are Worth Fighting For

Some skyscrapers you walk away from, deeming them obsolete Kodak film or “not relevant to the overall business.” Others though, you do everything in your power to save, from barreling through an extension to making a blood sacrifice 🩸

Take 280 Park, the aging but perfectly located 1.3M sf Grand Central-adjacent tower owned by SL Green and Vornado. The owners took out $1.1B in floating-rate debt in ‘17, set to mature in Sept. ‘23. They didn’t pay it off by then, and the loan was transferred to special servicing in Dec. Rather than take the L, though, the owners coughed up an additional $100M in equity to score a 2Y extension (at SOFR plus 1.76%), per CRED iQ. All cash securing the non-recourse loan was “trapped” until the debt has been repaid, and any additional extensions would require SLG and Vornado to kick in another $25M of equity. In a deal financed by Korean banks, the owners also paid $62.5M to buy the $125M mezz on the property, per CO.

After the struggle, the crown 👑 : The JV is in advanced talks w/ Paul Singer’s Elliott Investment Management to take 150K sf at the tower, per Bloomberg – the tower was 94% occupied at the time of the extension, so this likely pushes it over the line and w/ a blue-chip tenant to boot. Doom and gloom office tales are basically a fetish at this point, so it’s refreshing to get some color on a deal where things do work out.

Brought to you by: 1031 Specialists

Partner with 1031 Specialists: Hundreds of CRE brokers partner with 1031 Specialists to give clients the 1031 exchange experience they deserve and get paid for the referrals they give away for free today. To learn more, click here. 

Picking up the C-PACE

Are we finally seeing action on C-PACE? After a long period of all talk, no walk, the state-enabled green financing mechanism is heating up: Big dog Nuveen announced nearly $800M in new capital commitments for its C-PACE fund last month, and also provided $90M in C-PACE financing to Machine Investment Group and Taconic to recap 2 Hyatt-branded hotels in LA.

And last week, the NC Senate passed a CPACE funding program. Meanwhile, in New York, a state body has removed a cost-benefit ratio req. for new construction, opening things up for the financing to be used much more broadly. 💚   

Quickies

• 🎥 RealPage fights back after 18mos of hell

• Riverside-affiliated filing services co. rebrands as Nuco (first endorsement on page is from Shaya Prager 😍 )

• After Tricon megadeal, Blackstone to sunset Home Partners of America SFR brand 🌆 

• Kushner eats $17M humble pie over aborted REIT deal

• Piss poor: City of London fails to notch a single £100M+ deal in H1

• CIM wins right to foreclose on Greenwich Village office after owner’s bankruptcy maneuver fails

Funds Carry Water for Barry

When Barry Sternlicht’s liquidity-strapped SREIT capped investor withdrawals (0.33% of NAV, compared to the previous 2% limit) in May, a collective “fuuuuuck” echoed across the $90B private RE fund manager landscape. Such a show of weakness by one of the highest-profile players reverberates across the industry, and fund sponsors are reporting a spike in redemption requests.

“When Starwood started cutting redemptions, the first thing you think about is: what’s my guy going to do,” RE I-banker Kevin Gannon told WSJ. His firm Robert A. Stanger estimates that investors will redeem $16.5B from such funds this year, a massive leap from the $1.5B in ‘21., and that fundraising will hit just $5.7B this year, compared to $34B in the ‘21 heyday. How Starwood’s moves could “sour investor sentiment is our biggest risk,” said Hines CIO David Steinbach.

Blackstone’s BREIT, which recently got through its own redemption odyssey, saw redemptions hit $1.6B in May, about double the April figure. “There’s been some news based on this [Starwood] dynamic,” Blackstone’s Jon Gray said in May.

Others predict that even after a CRE rebound, such vehicles will lose their luster. “I suspect it will be hard to get that amazing fundraising again,” Wealth Logic’s Allan Roth told the publication.

(Bonus: How mega LPs are thinking about the key themes playing out at RE funds.)

Unquotable Quotes