Renowned Real Estate Private Equity Deals – Here’s an interesting list.
What is Private Equity (PE)?
Private equity involves institutional and wealthy investors buying ownership stakes in privately held enterprises. Private equity firms invest and manage investor funds. Finance professionals assess investment prospects and perform due diligence on prospective companies. These PE firms might also bring value to portfolio companies by providing strategic counsel, operational improvements, and industry contacts. Over a three- to seven-year investment term, they aim to improve the company's performance and value which helps them exit their investments with a premium return.
After maximizing value, private equity firms sell the company via a private sale or by listing on public markets. The private equity business and investors profit from these exits, returning their initial investment and a return on their investment.
What is the expected growth of private equity?
The private equity market is expected to grow by USD 734.93 billion from 2023 to 2027. The market is anticipated to progress at a CAGR of 9.32%.
What is Real-estate Private Equity?
Real estate private equity deals are real estate investments conducted through private equity funds or special purpose vehicles rather than public market vehicles such as REITs.. These funds acquire money from HNW individuals, institutions, and family offices, among others, and then invest it in real estate or real estate-related businesses.
Private equity (PE) transactions will alter the real estate market and will undoubtedly contribute to a strong economy. Private equity investment in real estate has been gradually expanding over the last decade, according to industry reports. Global private equity real estate investments reached a stunning £400 billion in 2022, representing a 20% year-on-year increase.
Moreover, the United Kingdom has emerged as a prominent market for real estate private equity investments. Private equity firms have invested over £50 billion in the UK property market in the last three years alone, accounting for roughly 40% of overall real estate investments.
What is the expected growth of private equity in the real estate industry?
The real estate market is anticipated to grow by $4 billion in 2023. The results are astounding, indicating the private equity sector's great success in the real estate business.
List of some renowned Real Estate Private Equity Deals from around the World
Some of the best real estate private equity deals from around the world are discussed below. They not only altered the market prices but also paved the way for the forthcoming mergers.
1. Brookfield Property & US Mall Operator Deal Worth $15.3 Billion
On 27th March 2018, Brookfield Property acquired GCP, a US shopping mall operator, for $15.3 billion. The acquisition went for 66% shares and was made to increase leverage with retailers and reuse GGP assets. The deal was reached after a special board committee deemed Brookfield Property's $14.8 billion cash and stock offer inadequate.
2. Blackstone & PS Business Parks, Inc. Deal
On July 20, 2022, Blackstone said it would pay $7.6 billion to acquire all of the existing shares of common stock of PS Business Parks, Inc by paying $187.50 per share in cash transactions. The deal was announced on April 25, 2022. In addition, the price paid was a 12% increase over the stock's previous closing price. Blackstone is relentlessly focused on becoming a REIT. PS Business parks were acquired to back up the claim.
3. Columbia Threadneedle & Aegon UK Deal Worth £500m
On 2nd May 2023, A well-known global asset management group Columbia Threadneedle Investments joined forces with Aegon UK to get into the real estate business. The plan is for Columbia Threadneedle's UK real estate unit to manage a commercial real estate portfolio worth more than £500 million. The forces stepped in to bolster their current exposure to the real estate sector and supply alternative skills on a worldwide scale.
4. KKR Acquisition of Cyrusone
Cyrusone announced the acquisition by funds controlled by KKR, a renowned global investment management firm, and Global Infrastructure Partners ("GIP") on their official website on March 25th, 2022. A total of $15 billion had been exchanged, with debt being assumed as part of the settlement. The merger and acquisition was the biggest in the data centre business. Since the verdict, KKR and GIP have taken control of Cyrusone, and the firm has flourished since it stopped trading on NASDAQ.
5. Apollo Global Management & Vonovia Deal
On April 26, 2023, Apollo Global Management made public a €1 billion investment in a portfolio of Vonovia-managed high-quality real estate properties. It is the largest residential real estate firm in the world, with $100 billion in total assets under management. The deal would provide the corporation with a long-term, low-cost capital option that will improve operations.
The transaction will help Apollo Global Management establish a firmer foothold in the real estate industry.
The world of top-tier private equity acquisitions has witnessed some incredible transactions that have tried to alter the global financial landscape for real estate and other industries. The world has seen the rise of massive investments, where courageous and astute investors have employed strategies to navigate an ever-changing economy.
These ventures, which were kept secret and meticulously planned like a well-tailored suit, were the best examples of how to make money in a smart way. The people who came up with these transactions revolutionised industries, formed new relationships, and unlocked value that had never been seen before, thanks to their financial know-how and ability to envision the future.