TPG in €900m property push

The stage is set for global private equity firm TPG to become a major investor in distressed UK and Irish property after forming a €900 million joint venture with Green Property.

This is a unique opportunity to partner with one of the most successful developers of real estate in Ireland and the UK at a time when the disruptions in the real estate market will present significant opportunities. Dag Skatum

TPG, which is led by David Bonderman and has never raised a dedicated real estate fund, has decided to team up with Dublin-based Green for the formation of Green TPG Partners to capitalise on opportunities.

The attempt to capitalise on market dislocation fits with remarks Bonderman made at a conference in April: that private equity firms focused solely on LBO strategies could face difficulties today. He also stressed that market conditions are different for private equity firms operating in different regions. “These days the world is like Gaul, divided in three parts,” he said, noting the US private equity market was once again leading with leverage, but that Asian and European opportunity sets were different. “In Asia, where there's a mini boom and edge of a bubble again, local lenders are opening up and there's more activity,” Bonderman said. “Then you've got Europe, which is deader than a doornail in most cases,” he said, adding that sovereign issues were likely to impact market activity.

TPG said in a prepared statement that its senior partners had “extensive experience” in real estate investing and the turnaround of distressed assets dating back to the early 1990s.

It added that Green TPG Partners would target commercial real estate opportunities in the UK and Ireland and would “actively seek to partner with government agencies and financial institutions to help manage its exposure to the sector”.

“This is a unique opportunity to partner with one of the most successful developers of real estate in Ireland and the UK at a time when the disruptions in the real estate market will present significant opportunities,” said TPG partner Dag Skattum.

The Texas-based firm has been become markedly more active in global real estate in recent months. 

David Bonderman

Last October, for example, it teamed Starwood Capital Group and the Federal Deposit Insurance Corporation (FDIC) to buy $4.5 billion of US real estate construction development loans owned by Corus Bank. In April this year it also announced a $750 million joint venture with Los Angeles-based real estate developer Rick Caruso aimed at retail centres and shopping malls on the west coast.
 
Also last year TPG acted in a consortium with Starwood and Five Mile Capital in a bid for troubled US hotel group Extended Stay.

In addition, it was reportedly among bidders for Anabuki Construction Inc, a Japanese apartment developer that failed last year, and last week was also linked as having interest in ING Real Estate Investment Management, which was is poised to be marketed for sale.

Green Property is a major force in UK and Irish property and is led by chairman Stephen Vernon and managing director Pat Gunne, who recently agreed to make his debut as a speaker at the annual PERE Forum: Europe being held later this month. The Dublin-based group is said to be hammering out a deal to manage around €1 billion of assets for Anglo Irish Bank.