REPE Fund Profile Series - Part Eleven: CBRE Investment Management

Welcome to Part Eleven of our Fund Profile Series. We’re continuing to work our way through the top 50 global real estate private equity (REPE) firms according to the 2020 PERE 100 list.

Each Fund Profile briefly summarizes each fund’s history, as well as getting into the details of the funds themselves. And to help you get ready for your upcoming REPE technical interview(s), we also outline a few of each firm’s key real estate equity investments in recent years. 

Following on from Part Ten of the series which zeroed in on Angelo Gordon, the eleventh part of this series will peel back the curtain on CBRE Investment Management.

The lowdown on CBRE Investment Management

CBRE Investment Management (formerly known as CBRE Global Investors), started life in 1972 as the asset management arm of Coldwell Banker, a spin-off commercial real estate company formed by a group of colleagues after the devastating San Francisco earthquake of 1906. Coldwell Banker would later become the behemoth that is the CBRE Group—CBRE Group is a publicly listed firm (via the NYSE in 2004) and the world’s largest commercial real estate services and investment company. 

The current iteration of CBRE Investment Management (from now on CBRE IM) is the 2021 merge of three separate brands owned by the Group: CBRE Global Investors, CBRE Clarion, and CBRE Caledon—these are a collection of investment platform acquisitions covering the Asian, North American, and European markets.

As an independently operated affiliate of CBRE Group, CBRE IM has its own corporate headquarters in New York City, away from its parent company (the Group is headquartered in Dallas, Texas)—its team of over 900 operates in over 30 offices spanning 20 countries, including Hungary, Canada, Australia, and Korea.

As of September 30, 2021, CBRE IM holds $133.1B worth of assets under management across at least 30 investment vehicles.

CBRE IM’s REPE strategy

The firm’s global real estate equity investment portfolio covers all major asset classes including commercial mortgages and other credit assets, REITs and other listed securities, and private investments in assets including infrastructure, retail developments, industrial and logistics assets, office properties, residential units, and hospitality and leisure properties.

CBRE IM takes the established approaches of Core, Core+, Value-Add, and Opportunistic strategies to invest in across established global real estate markets:

Core

The firm offers several direct private real estate investment products focusing on its core approach, providing a range of sector-specific to market-specific options. Here, CBRE IM centers the strategy on investing in low-risk, low-volatility, and long-term assets that offer stable returns for investors.

Core+

In CBRE IM’s core+ offering, the firm provides global indirect commingled solutions that offer their investors exposure to diversified portfolios including high-quality assets across all property types with specialist operators in Europe, North America, and the Asia-Pacific region—here, the firm aims to deliver income-producing assets with stable growth.

Value-Add

In the U.S., European, and Asia-Pacific markets, CBRE IM offers value-add products that focus on improving under-developed properties with growth potential so they perform well in changing market conditions.

Opportunistic

Within its direct real estate equity investment strategies, the firm’s U.S. Development product specializes in building logistics and residential assets in prime locations. Here, the focus is on selling the assets only once total returns are advantageous. 

CBRE IM also offers an indirect secondaries product using this approach, providing investors with more liquidity in accessing global portfolios that take advantage of “special situations”—or, in other words: opportunities where specialist providers grab assets at deep discounts because of liquidity issues or capital constraints.

A few examples of CBRE IM’s deals

For a REPE technical interview, it’s crucial to examine an investment firm’s track record with deals and funds to get to grips with the hows and whys of its investment strategy . 

To get you started, we’ve listed a few of CBRE IM’s notable deals below:

400 South Hope Street (Los Angeles, U.S.)

In 2016, CBRE IM sold the CBRE Group HQ (in LA at the time) to a joint venture between PNC Financial Services Group and GLL Real Estate for $300M after a 4-year period of refurbishment, amenities upgrades, and increased rent to existing corporate tenants. 

The Group originally bought the 26-story, 701,535-square-foot Class A office building for $238M in 2012. The Group used the top two floors for its Group HQ (and its flexible workspace initiative), while the company leased the remaining floors at around 80% occupancy.

Glendale Gateway (Colorado, U.S.)

In 2018, a joint venture between Harbor Associates and Belay Investment Group paid CBRE IM $28M to acquire the Glendale Gateway, an eight-story building of 136,000 square feet. 

At the time of sale, the Glendale Gateway was 75% leased with prominent tenants, including Gambit Gaming, Intercare Holdings, and Fuse Media.

The Atlas Portfolio (England, U.K.)

In 2018, CBRE IM sold its prime multi-let English industrial portfolio to clients of Knight Frank Investment Management and the UK-based Schroders REIT for at least GBP £62M (around $87.8M).

The portfolio included 7 well-located industrial assets, with a combined total of 431,067 square feet (about half the size of Buckingham Palace) leased to 33 tenants for mixed industrial uses.

Cross Dock Portfolio (Western Germany)

In 2017, CBRE IM acquired a portfolio of 10 newly developed logistics assets in western Germany for €128.4M (approx. $142.1M) in an off-market deal with Hellmich Unternehmensgruppe, a German construction company.

DHL was the sole occupier for all buildings in the portfolio at the time of purchase, with an average lease length of 13 years. The acquisition added just over 549,000 square feet (about the same size as the Rogers Centre in Toronto) to CBRE IM’s German assets under management. 

Mitsubishi Fuso Portfolio (Japan) 

In 2016, a consortium, including CBRE IM, acquired a portfolio including 169 logistics assets—around 5.6million square feet in total (about 3 times the size of Grand Central Station)—across Japan for JPY 105.1B (approx. $920.2M). The sole occupant of the portfolio was Mitsubishi Fuso Truck and Bus Corporation, one of the largest heavy vehicle suppliers in Japan.

In 2020, the consortium completed the last sale of the portfolio, bringing in an overall total sale value of JPY 140.4B (around $1.23B)—making it the largest real estate transaction of the year in Japan.

Back to you...

We hope you found this CBRE Investment Management profile helpful for your REPE technical interview preparations. Now that you’re up to speed: do you have the right strategy to sell yourself well at your interview?

Let us help you set yourself up for your new career in real estate private equity firms: check out how we can support your career goals at Leveraged Breakdowns.

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About the Author: 

Melody Sadé Abeni is a London-based writer who specialises in commercial real estate content. As a generalist member of the Leveraged Breakdowns team, she crafts detailed posts geared towards those curious about the real estate private equity life. 

In her former professional life, Melody supported senior corporate executives as a global mobility consultant and did her time in both management consulting and specialist asset management firms.