Investors seeking profit from commercial real estate pain

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Billions have been raised at an unforeseen pace. Data from Preqin reflected a record 939 commercial real estate funds around the world collectively targeting US$297 billion as of early April.

The Journal said pension funds and endowments are staying away from the space for now, focusing instead on considering the risks of further damage to their stock portfolios. In contrast, affluent family offices and sovereign wealth funds are reportedly taking a more aggressive stance as they try to make up for losses in their current property portfolios or take inspiration from fortunes made during similar downturns in past crises.

“We had to turn investors away,” said Al Rabil, head of Florida-based Kayne Anderson Real Estate, which reportedly completed a US$1.3-billion raise for a fund targeting debt sold by distressed sellers within two weeks.

The stars aligned for some investment managers, including Blackstone, that were closing funds just as the crisis hit; they now a full quiver of arrows with which they can target distressed acquisitions in the coming months.

Others are augmenting their current stores of dry powder by raising new money, including KKR, which is reportedly working on a distressed fund focused on real estate as well as other opportunities.



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