PE Real Estate Deals Reach Five-Year High in Q1

Asia accounted for just 1 per cent of the number of real estate deals announced in the quarter.

Preqin

Private equity real estate (PERE) deals reached a five-year high in the first quarter of this year, marked by 1,403 deals worth an aggregate $67 billion, according to the latest report released by Preqin.

While the amount declined from the fourth quarter of 2017, the first quarter figure represents a five-year high for deal activity in an opening quarter, both in terms of the number of deals and their aggregate value.

Encouragingly, the PERE deal market is also seeing signs of diversification: office assets remained the most sought-after property, but represented just 29 per cent of total deal value in the quarter, down from 40 per cent in the corresponding quarter a year prior.

Firms also seem to be turning increasingly to portfolio transactions – although these deals represented just 15 per cent of the number of transactions in Q1 2018, unchanged from the year before, their share of total deal value increased five percentage points to 35 per cent.

North America accounted for two-thirds (67 per cent) of the number of deals, while Europe made up a further 30 per cent. Asia accounted for just 1 per cent of the number of real estate deals announced in the quarter.

Office assets accounted for the largest proportion of deal value (29 per cent). This is down from the 40 per cent they accounted for in Q1 2017. Portfolio transactions accounted for 15 per cent of the number of deals, on par with Q1 2017. However, their share of deal value rose to 35 per cent, up from 30 per cent a year prior.

The largest single-asset transaction was the $1.5-billion acquisition of 701 Seventh Avenue by Fortress Investment Group and Maefield Development.

Also Read: Asia-Pacific Private Equity Deals Hit All-Time High in 2014

The largest portfolio private equity real estate deal was the acquisition of Canyon Industrial Portfolio by Blackstone Group for $1.8 billion.

“This shows the PERE deal market is going from strength to strength, as this comes on the heels of a record year in 2017. If this pace continues, we could see 2018 surpass its predecessor as the biggest year ever for PERE transactions,” said Oliver Senchal, Head of Real Estate Products at Preqin.

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