Abu Dhabi Investment Authority’s US$2 billion joint venture deal with Boston-based real estate investment manager Rockpoint has pushed its total allocations to such real estate platforms to more than US$10 billion, according to Global SWF research.

The platform is set to target industrial investment opportunities, focusing primarily on build-to-core industrial investments. The venture will look specifically at high barrier-to-entry locations across infill, demand-driven, gateway and growth markets in the US.

Mohamed Al-Qubaisi, Executive Director of the Real Estate Department at ADIA, said, “We have built a sizeable portfolio of industrial real estate assets and continue to see attractive opportunities in the sector. This new platform with Rockpoint aligns with our approach of investing with proven partners to target specific areas of value.”

Altogether, state-owned investors have allocated nearly US$10 billion to real estate platforms worldwide in the year-to-date – exceeding the full-year figure for 2020 and 43% of the level achieved in the whole of 2021. ADIA has emerged as a leading contributor to real estate joint ventures, representing more than a fifth of the total value invested by SOIs so far this year. The Emirati investor is bolstering its ties with existing joint venture partners, in preference to going it alone and originating its own deals.

The Rockpoint deal comes two months after ADIA created a platform with Landmark Properties (Landmark), initially targeting US$1 billion of investments. The joint venture focuses on acquiring and operating value-add student housing properties in targeted markets throughout the US. Previous joint ventures between Landmark and ADIA comprise assets with nearly 15,000 beds in tier 1 university markets throughout the country.

Salem Al Darmaki, Deputy Director of the Real Estate & Infrastructure Department at ADIA, said: " This new joint venture offers the opportunity to continue to grow our exposure to student housing in the US, a sub-sector that continues to display compelling fundamentals."

Also in March, ADIA increased its exposure to Australia’s booming industrial real estate sector by more than A$1 billion through its tie-up with local investment platform LOGOS. This raised the gross asset value of its mandate with Logos to more than A$5 billion.

In December, ADIA forged an agreement with Greystar Real Estate Partners to create a GBP2.2 billion platform to develop build to rent housing in London and its surrounding commuter towns. The strategic partnership is targeting a development pipeline of approximately GBP1.8 billion in total capitalisation and equity commitments of up to GBP750 million between the partners. The platform is seeded with a 0.84-acre site in Battersea, London, for GBP31 million. In conjunction with the new strategic partnership, Greystar assumed ownership and management of the GBP400 million Fizzy Living portfolio, which comprises nearly 1,000 homes, from Metropolitan Thames Valley Housing (MTVH).

This represents the second portfolio of scale to be developed by Greystar with ADIA subsidiaries in Europe. Since 2015, Greystar and ADIA subsidiaries have created a portfolio of more than 6,000 homes for students and young professionals in the Netherlands under the OurDomain brand.

Al Darmaki said, “We believe strong long-term fundamentals are driving the demand for purpose-built rental housing in the London area. With the creation of this platform, our objective is to address this specific, growing market opportunity while expanding our relationship with a proven, world class partner in Greystar. This is consistent with our approach of investing in high conviction opportunities, at scale, to capture future growth trends.”

ADIA has clearly moved on from the days when it snapped up prestige trophy assets, such as luxury hotels and large office blocks. Instead, it is following other state-owned investors in establishing joint ventures in real estate to create large asset pools in partnership with a leading investor in the sector, who originates deals backed by the capital. This maybe preferable in entering a market segment or region where a sovereign fund lacks in-house capacity and experience and where partners have a proven track-record of delivering superior yields. Canadian public pension funds along with Singapore’s GIC and Dutch public pension fund manager APG have been the most enthusiastic investors in joint venture real estate partnership, eclipsing ADIA’s activity.

ADIA has, however, gained from its pre-pandemic investments in logistics real estate ventures, which include multi-billlion dollar platforms formed with Prologis in China and LOGOS in Australia. Indeed, the segment was to become a hot target for SOIs in 2021 as the global lockdown fuelled e-commerce and, in turn, created demand for warehousing and last-mile deliveries – particularly in Asia.

ADIA’s recent interest in residential housing follows the overall trend amid healthy asset prices in developed markets, despite pressures on household income during the pandemic. In 2021, residential JV platforms received an estimated US$6.4 billion of sovereign capital, a 3.4x increase on the previous year and a record high. Global rental housing developer Greystar proved to be a favored partner of Canadian public pension fund CPP Investments which dominated the segment, with single family and multi-family platforms in the US and Brazil. European residential and student housing developer Round Hill also got significant backing in two major deals. In the Netherlands, it built on an existing partnership with Abu Dhabi’s Mubadala and brought in CDPQ to develop rental homes, while in the student accommodation sector it formed a EUR1 billion regional platform with CPP.

Office ventures were boosted with an estimated US$3.6 billion of sovereign capital in 2021, having seen negligible interest in sovereign partnerships in 2020. Nearly all the investment was in US platforms except for CPP forging an alliance in India with RMZ to back office developments in Chennai and Hyderabad. In the US, CPP and GIC teamed up with Boston Properties to establish a US$1 billion platform. Another major deal came in the life sciences property sector which saw CPP sign a deal to create a platform with Greystar, targeting an initial US$1.2 billion in investment opportunities.

Related funds ADIA
Related tags Logistics Real Estate