TPG Real Estate realizes $2.6 bln in less than 18 months

  • Seven investments grossing returns of 25 pct-plus
  • Largest realization, in Taylor Morrison, returned $1 bln
  • TPG marketing third RE fund with $3 bln target

TPG’s private real estate arm realized more than $2.6 billion of proceeds through seven of its investments since the start of 2017, a fund presentation obtained by Buyouts shows.

TPG Real Estate Partners, a $3.7 billion investment platform led by Kelvin Davis and Avi Banyasz, was grossing a 27 percent internal rate of return and 2.6x multiple on those investments through full and partial exits.

Its largest single realization came through the sale of more than $1 billion of shares in Taylor Morrison Home Corp, a New York Stock Exchange-listed homebuilder, in January. TPG invested in Taylor Morrison in 2011 and continued to hold a stake following its 2013 initial public offering, a presentation delivered at a May 3 Teachers’ Retirement System of Louisiana board meeting says.

Unlike most real estate funds, which tend to focus on individual properties, TPG Real Estate Partners’ strategy generally involves acquiring businesses that manage extensive real estate assets, New Jersey Division of Investment documents say.

One example is the firm’s $363 million investment in Enlivant, an assisted-living company that operates roughly 170 communities throughout the U.S.

At the time TPG first invested in Enlivant, in 2013, each of the assisted-living units in Enlivant’s portfolio was valued at around $68,000. More than a third of those units were unoccupied, the presentation shows.

A new management team, coupled with greater consumer demand for assisted-living facilities, pushed Enlivant’s occupancy rate to 80 percent as of February 2018. When TPG sold a 49 percent stake in the company’s real estate portfolio to Sabra Health Care REIT, in January, the value of the company’s housing units had jumped to $195,000.

The firm’s investment in Enlivant has returned $352 million of proceeds. TPG still has a majority stake in Enlivant’s real estate portfolio and full control of the business’s management company. It’s marked the investment at a 42 percent gross IRR and 3.1x multiple as of Dec. 31.

TPG is marketing its third flagship real estate fund with a $3 billion target. TPG’s second real estate fund, which closed on more than $2 billion in 2015, was netting a 38.3 percent IRR as of Sept. 30, a Hamilton Lane report prepared for Louisiana Teachers’ shows.

Louisiana Teachers’ committed up to $75 million to the fund at its May 3 meeting. New Jersey committed up to $100 million to Fund III in March.

TPG declined comment.

Action Item: More on TPG Real Estate Partners:

Jim Coulter, a TPG founding partner, addresses New Jersey State Investment Council. Photo by Sam Sutton, Buyouts