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More than $8.7 Billion in Capital Raised for New Commercial Real Estate Investments

06/10/2015

For commercial real estate investments, a craze for raising capital has been occurring to a tune of $8.7 billion. Although different types of properties have been focused on, primary targets have been medical office buildings, core multi-family structures, and opportunistic situations.

Considering the amount of capital raised recently from investors, it is evident that interest in commercial real estate assets is still incredibly good.  From just four institutional investors alone, $7.9 billion in commitments were made and a new joint venture up to $800 million formed.

The Lone Star Group

The first and final close for Lone Star’s latest commercial real estate fund was held. Called the Lone Star Real Estate Fund IV, $5.8 billion in combined capital commitments was raised. According to a company representative, the money will be invested over the next three years with the main focus being on commercial real estate property is disrepair, as well as related debt investments in Japan, Europe, and the United States.

As part of this fund, up to $300 million was committed by the Illinois Teachers’ Retirement System. In addition, $30 million commitments were made each by the Arkansas Teacher Retirement System and Rhode Island State Investment Commission. Capital will be deployed by Lone Star to acquire major portfolios, followed by quick liquidation. This reduces both leverage within the portfolio and absolute dollar commitment in that market.

Kayne Anderson

The fourth fund by Kayne Anderson Real Estate Investors closed at over $1 billion. Included in the Kayne Anderson Real Estate Partners IV fund are foundations, international investors, high net worth individuals, and family offices. With a commitment up to $35 million, the Louisiana Teachers’ Retirement System was the biggest backer

The main focus of this fund is on opportunities within niche real estate sectors to include senior housing, off-campus student housing, and medical office buildings. To date, the portfolio has roughly 3,500 senior housing beds, 20,000 student housing beds, and over 2.5 million square feet of medical office space.

Additional Players

In addition to Lone Star and Kayne Anderson, a number of other players made commitments in commercial real estate capital funds.

  • Waterson Associates LLC – A joint venture was formed with Allianz SE from Germany and Clal Insurance from Israel with a commitment to purchase as much as $800 million of core and core plus apartments in large US metropolitan cities such as Chicago, Boston, New York, Washington DC, and Seattle, among others.
  • Prudential Real Estate Investors – Capital was raised for the Senior Housing Partners V investment fund with $629 million in commitments. The capital, which actually exceeded the $500 million target, consisted of $430.5 million from 10 existing investors, as well as $198.5 million from new investors.
  • Heitman – The global real estate investment manager Heitman closed the Heitman Value Partners III fund established for investments in real estate across the United States. Total equity commitments of $500 million were secured, surpassing the initial $100 million mark. Along with existing investors, funds came from a number of new investors.
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