Private Equity in Real Estate

Private Equity in Real Estate (PERE)

 The PERE market in the UK, Europe and globally

• Size and structure of the PERE market
• Case studies: landmark PERE deals
• Private equity investment goals in real estate
• Comparison with private credit in real estate

Investment choices and outcomes

• Strategic issues for PERE investors
  • Geographic reach and currency issues
  • Sectoral choices
• Objectives and financial performance of Core, Core+, value-added and opportunistic strategies
• Measuring PERE performance (including ESG reporting)
• Success and failure of PERE investments
  • Comparisons with public real estate equity performance
  • Macro-economic, sectoral, infrastructure and local drivers of performance
• Assets under Management as strategy
  • Calculating AuM
• Acquisitions and joint ventures by PERE funds
  • Residential, commercial, industrial, land and indirect investment
  • Relative sectoral performance in the UK, Continental Europe, the USA and other jurisdictions
• Geographic diversification of PERE funds
• Proptech as a PERE investment destination

Structuring PERE investment

• Creation of closed-end funds
  • Comparison with open-ended and other funds
• Case studies: UK, Luxembourg and other EU jurisdiction funds
• The use of LLPs and SPVs in PERE
  • Issues of greenwashing and taxation
• Fee types (asset, acquisition, management, finance) levels and carried interest

PERE Regulation

• Accounting for investments, holding and disposal
• PERE taxation rules in the UK, Continental Europe and comparison with the USA
• Portfolio management
• Use of derivatives

PERE Investment and Management

Sources of capital for PERE

• Equity and hybrid capital
  • Pension funds
  • Insurance companies
  • Scope of other investors
• Debt at the fund level
  • Sources of fund level debt – banks and direct lenders
  • Typical PERE covenants (capex, opex, equity injection
  • Security arrangements
  • Debt servicing and alternative structures
• The role of property debt
  • Leverage levels and debt sources at the property level
  • Senior, junior and mezzanine loans
  • Structuring PERE debt at the property level
  • Refinancing mechanisms
  • Case studies: cashflow waterfalls and their outcomes

Decision-making at the individual property level

• Screening individual properties
  • Deal pipelines auditing
  • Tools, timeframes and content of due diligence reporting
  • Sustainability considerations for individual properties
  • Timeframes, relationships with consultants and decision-making
• Valuations and their role in PERE returns
  • Valuer selection and relationships between PERE and valuers
  • Value creation for PERE investment (including distressed assets)
• Case studies: Excel and Argus models compared
• Managing property exits
  • Contribution of individual property exits to PERE performance

PERE Documentation

• Investment agreements (including joint ventures)
• Investor (LP) relations
  • Fund performance data for investor reporting and requests (routine and ad hoc)
  • Reviewing annual quarterly financial statements and investor reports
• Fund liquidity management (capital calls/distributions and credit facilities),
• Fund level models
• Management of the fund, database, IT and adherence to regulatory requirements
• Individual asset-level reporting
• Outsourcing administration

Our trainer comes from an old real estate family in the UK. He graduated with a first-class degree in Philosophy, Politics and Economics from Oxford University and amongst other postgraduate degrees he holds a PhD on developer strategy from Curtin University. He also holds the CLC legal qualification.

He began his career with the UK public sector as an analyst, subsequently joining the mainstream Civil Service fast stream. He then returned to economic analysis and became a divisional forecasting head for what is now S&P’s Global Insight. He subsequently worked on a range of derivative contracts for the London Commodity Exchange, and then set up his own consultancy with a range of clients from the international property sector, including banks and chartered surveyors, advising on aspects of investment, infrastructure, governance and real estate financing, valuation and audit. He advises sovereign wealth funds on real estate investments and currently also serves as Chief Economist of a chartered surveyor.

He regularly presents seminars on a range of real estate topics to developers, investors, bankers, government agencies, and other organisations worldwide, and currently delivers around sixty days a year of training. He has also published a number of books, including on valuations, derivatives, governance and real estate modelling.

Upon completion of this course, participants will be able to:

• Understand the size and structure of the PERE market in the UK, Europe and globally
• Contrast the objectives and financial performance of Core, Core+, value-added and opportunistic strategies
• Know how to measure PERE performance (including ESG reporting)
• Appreciate how successful PERE has been by comparison to public real estate and other asset classes across multiple jurisdictions
• Understand the strategic decisions that drive the creation of value by PERE funds, including sectoral and geographical choices and the use of technology
• Compare and evaluate the capital structure and fee arrangements of PERE funds across multiple jurisdictions
• Understand how PERE is regulated and taxed in the UK, Continental Europe, the USA and other jurisdictions
• Develop relationships with Limited Partners for a PERE fund
• Understand how different types of PERE debt are structured at multiple levels
• Conduct due diligence so as to make informed investment decisions regarding individual properties
• Audit and create financial models to support property investment decisions monitoring and exit
• Understand the role and importance of property valuation in PERE performance
• Draft PERE investment documentation
• Assess the effectiveness of PERE fund management arrangements including reporting and regulatory compliance

This course focuses on what distinguishes PERE from private equity investment overall, which conventional private equity tools it employs, and how structure and investment choices drive performance at both a fund and individual property level.

• Our trainer has a an investment, government legal, and financial risk management background.
• His experience in over 40 years of practical and analytical real estate has brought him into contact with PERE funds worldwide on a continual basis.
• His role as a consultant in internal audit for PERE investors and within a chartered surveyor firm provides him with regular evidence of the impact of successful and unsuccessful PERE investments in both development projects and investments worldwide.
• As a property investor himself he has a personal interest in real estate investment in a range of jurisdictions.

 Through presenting to clients involved in real estate deals worldwide he is constantly exposed to the impact of real estate risks and their management on value creation in development and investment.

This course is designed for professionals either currently or potentially involved in PERE transactions across UK, European and other developed jurisdictions. It will be especially valuable for:

• Insurance, pension and other LP investors:
  • C-suite executives wishing to enhance their appreciation of PERE
  • Those performing due diligence on PERE funds and other investment vehicles
  • Finance and legal department managers
• Private Equity and other real estate investors:
  • C-suite executives involved in strategy and international real estate investment
  • Investors and fund managers involved in deals with a projected real estate component
• Lenders:
  • Those responsible for PERE fund and loan due diligence
  • Lending managers at banks and other institutions overseeing property lending and investment portfolios to PERE clients
• Advisors and Consultants:
  • Lawyers and accountants intending to broaden their understanding of PERE
  • Valuers seeking to appreciate the particular circumstances surrounding valuations in a PERE context
• Government and Regulators:
  • Those involved in regulating private equity regulation in the UK and European jurisdictions
  • Public servants involved in property legislation and the regulation of developers and investors
  • ESG (Environmental, Social, and Governance) professionals involved in real estate transactions
• Practitioners from Specific Regions:
  • Professionals from the UK looking to expand their knowledge of PERE in Europe and globally
  • Real estate investors from EU countries seeking to understand differences in PERE practices across member states