Niche Real Estate in North America Alternative Assets

The Facts Gaining Ground: Niche Real Estate in North America alternative assets. intelligent data.

Gaining Ground: Niche Real Estate in North America

We take a look at niche real estate in North America, including fundraising, funds in market, deals and investors.

Fundraising Fig. 1: Capital Raised by North America-Focused Niche Private Real Estate Funds as a Proportion of Capital Raised Preqin’s Real Estate Online contains detailed information on by All North America-Focused Funds (As at October 2016) 65 North America-focused private real estate funds that have reached a ﬁ nal close in the last decade and primarily target 3.0% investment in niche assets such as senior homes and student 2.7% housing. 2.5%

While still a small segment of the North American real estate 2.0% fundraising market, the prominence of niche vehicles on the

continent has risen in the last 10 years. Between 2006 and 1.5% 2010, North America-focused niche funds represented 1.1% of all North America-focused capital raised, increasing to 2.7% 1.1% 1.0% for funds raised since 2011 (Fig. 1). Furthermore, 2015 was a record year for these vehicles, with 12 funds securing $4.8bn in 0.5% institutional capital (Fig. 2). Proportion of Aggregate Capital Raised 0.0% 2006-2010 2011-2016 YTD

Date of Final Close Source: Preqin Real Estate Online

Fig. 2: North America-Focused Closed-End Niche Private Fig. 3: North America-Focused Closed-End Niche Private Real Estate Fundraising, 2006 - 2016 YTD Real Estate Fundraising by Primary Strategy, (As at October 2016) 2006 - 2016 YTD (As at October 2016)

14 100% 3 0.3 12 12 90% 80% 10 23 5.1 9 Debt 70% 8 8 8 60% Opportunistic 6 6 6 5 4.8 50% Value Added 4 4 4 40% 28 Core-Plus 2 5.7 2 1.8 Proportion of Total 30% 1.4 1 Core 0.6 0.8 0.6 0.5 0.9 0.6 0.1 0.01 20% 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 10% 6 0.4 YTD 5 0.6 Year of Final Close 0% No. of Funds Aggregate Capital No. of Funds Closed Aggregate Capital Raised ($bn) Closed Raised ($bn)

Source: Preqin Real Estate Online Source: Preqin Real Estate Online

Fig. 4: Five Largest North America-Focused Niche Private Real Estate Funds Closed, 2006 - 2016 YTD (As at October 2016)

Fund Firm Fund Size (mn) Strategies Property Types Final Close Date Kayne Anderson Real Kayne Anderson Capital Medical/Healthcare, Student 1,000 USD Value Added Mar-12 Estate Partners IV Advisors Housing Harrison Street Real Estate Harrison Street Real Medical/Healthcare, Self Storage, 850 USD Opportunistic Apr-15 Partners V Estate Capital Senior Home, Student Housing Harrison Street Real Estate Harrison Street Real Medical/Healthcare, Self Storage, 750 USD Opportunistic Jan-15 Partners IV Estate Capital Senior Home, Student Housing Kayne Anderson Real Kayne Anderson Capital 750 USD Opportunistic Student Housing Sep-13 Estate Partners III Advisors ROC | Seniors Housing & Bridge Investment Opportunistic, 735 USD Medical/Healthcare, Senior Home Nov-07 Medical Properties Fund Group Partners Value Added

Source: Preqin Real Estate Online

The Facts Gaining Ground: Niche Real Estate in North America alternative assets. intelligent data.

Funds in Market

As the North American niche real estate market has grown in America-focused niche funds in market, targeted by 40%, 35% prominence, more of these vehicles have been brought to market and 35% of vehicles respectively (Fig. 6). After closing funds IV recently. In 2013, nine funds were seeking $1.5bn in capital and V in 2015, Harrison Street Real Estate Capital is back in commitments but by 2016, the number of funds in market had market with its sixth fund, Harrison Street Real Estate Partners more than doubled to 20 while the aggregate capital targeted VI. The fund is targeting $950mn for investment in off-campus grew to $5.0bn (Fig. 5). student housing, senior housing, medical ofﬁ ces and storage properties in the US. Senior homes, medical/healthcare facilities and student housing are the dominant property types sought by North

Fig. 5: North America-Focused Closed-End Niche Private Fig. 6: North America-Focused Closed-End Niche Private Real Estate Funds in Market over Time, Real Estate Funds in Market by Property Type October 2013 vs. October 2016 (As at October 2016)

25 45% 40% 40% 20 35% 35% 20 35%

30% 15 25%

20% 10 9 15% 15%

5.0 10% 5

Proportion of Funds in Market 5% 1.5 5% 0 0% Oct-13 Oct-16 Senior Medical/ Student Self Car Homes Healthcare Housing Storage Parks No. of Funds Raising Aggregate Capital Targeted ($bn) Property Type Source: Preqin Real Estate Online Source: Preqin Real Estate Online

Fig. 7: Five Largest North America-Focused Closed-End Niche Private Real Estate Funds in Market (As at October 2016)

Target Size Fund Firm Strategies Property Types (mn) Harrison Street Real Estate Partners Harrison Street Real Estate Medical/Healthcare, Self Storage, 950 USD Opportunistic VI Capital Senior Homes, Student Housing AEW Senior Housing Investors III AEW Capital Management 500 USD Value Added Senior Homes Care Seniors Housing Fund 1 Care Investment Trust 500 USD Opportunistic, Value Added Senior Homes Green Courte Real Estate Partners IV Green Courte Partners 500 USD Value Added Car Parks, Residential Independence Place Student Housing Place Properties 500 USD Opportunistic Student Housing Initiative

Source: Preqin Real Estate Online

Fig. 8: Sample North America-Based Institutional Investors in Niche Private Real Estate Funds Data Source:

Sample Niche-Focused Funds Preqin’s Real Estate Online contains detailed Investor Type Location in Portfolio information on more than 180 institutional investors State of Public Prudential Senior Housing that are currently invested in, or have previously Madison, Wisconsin Pension Partners IV; Fortress Holiday committed to, a niche private real estate fund. US Investment Board Fund Investment Fund Harrison Street Real Estate Proﬁ les include comprehensive information on Liberty Mutual Insurance Boston, Partners IV Co-Investment; current and target allocations, assets under Insurance Company US Harrison Street Real Estate management, previous commitments, future Partners IV investment plans and much more. Skillman Detroit, Canyon-Agassi Charter School Foundation Foundation US Facilities Fund For more information, please visit: New Mexico Sovereign Santa State Investment Wealth Blue Vista Student Housing Fe, US www.preqin.com/reo Council Fund

Source: Preqin Real Estate Online

The Facts Gaining Ground: Niche Real Estate in North America alternative assets. intelligent data.

Deals

Deals involving private equity real estate (PERE) ﬁ rms for In absolute terms, 37 deals for niche assets were completed niche assets in North America have also grown in importance in 2013 for $856mn, while 2016 so far has seen 59 deals in recent years, rising from representing 2.1% of all North completed for $5.8bn (Fig. 10). American transactions and 0.9% of aggregate deal value in 2013 to 2.9% of the number and 4.2% of the value in 2016 so far (Fig. 9).

Fig. 9: North American Niche PERE Deals as a Proportion of All North American PERE Deals, 2013 - 2016 YTD Fig. 10: North American Niche PERE Deals, (As at October 2016) 2013 - 2016 YTD (As at October 2016)

4.5% 70 7 4.2% 4.0% 59 60 57 6 Aggregate Deal Value ($bn) 55 3.5% 50 5 3.0% 2.9% 2.7% 2.5% 2.5% 40 37 4 2.1% 2.1% 2.0% 30 3

1.5% No. of Deals Proportion of Total Proportion of Total 0.9% 20 2 1.0% 0.7% 0.5% 10 1

0.0% 0 0 2013 2014 2015 2016 YTD 2013 2014 2015 2016 YTD No. of Deals Aggregate Deal Value No. of Deals Aggregate Deal Value ($bn)

Source: Preqin Real Estate Online Source: Preqin Real Estate Online

Fig. 11: Sample North American Niche PERE Deals Completed, 2013 - 2016 YTD (As at October 2016)

Asset Buyer(s) Seller(s) Deal Size (mn) Location Deal Date Heitman, National Storage iStorage Niche Portfolio Unidentifi ed Seller(s) 630 USD US Sep-16 Affi liates Trust AMP Capital Investors (Australia), Millennium Garages LMG2 370 USD Chicago, US May-16 Northleaf Capital Partners Houston Orthopedic & Spine CNL Financial Group Unidentifi ed Seller(s) 76 USD Bellaire, US Jul-14 Hospital Campus Building & Land Technology, PGIM Real Estate, Pioneer Plaza 90 USD New York, US Mar-15 Quinlan Development Group Unidentifi ed Seller(s) Unidentifi ed Seller(s), US, Senior Housing Portfolio Welltower 1,150 USD CA, US; WA, US Oct-16 Vintage Senior Living

Source: Preqin Real Estate Online

NEW! Real Estate Deals

Preqin’s Real Estate Online has expanded to include detailed transaction data, making it the only platform that can provide a truly complete picture of the private real estate fund industry.

View detailed information on deal and exit size, type and location of assets purchased or sold, deal participants, service providers involved in the deal and much more.

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