Major Real Estate Investors Say Capital Is Pouring Into Funds for Purchases in 2022

Some of the country’s most active commercial real estate investors are stockpiling capital for acquisitions heading into the new year, with global investment firm Carlyle leading the way with an $8 billion fund closing and Brookfield reporting it raised $4 billion.

The investment capital pouring into funds not only shows the types of property popular with investors this year but points to where acquisitions may be headed going into 2022: student and affordable housing, industrial real estate, apartment buildings that can be renovated to allow higher rents, and financing for high-end buildings.

In one sign of investor interest, Carlyle started raising capital for its ninth real estate fund this past summer and closed it out just six months later after raising about $8 billion — and surpassing its initial target of $6 billion.

“COVID-19 has accelerated many trends in the way that real estate is utilized. From the explosive growth of e-commerce to the exodus from offices and dense urban areas, the pandemic has affected each property type differently,” according to fundraising material for Carlyle Realty Partners IX. “The pandemic has demonstrated that real estate is not a homogeneous asset class, and drivers for each sector differ.”

Carlyle said it sees opportunities across multiple property types as “the same e-commerce tailwinds that have driven demand in the industrial market are headwinds for the retail property market. Similarly, the shift to work-from-home has decreased office demand while lifting rents for data centers and larger for-rent housing units.”

The firm also sees opportunities in multifamily, single-family rental, active senior communities and life sciences offices.

Seeking to spread the fund’s exposure to avoid the risk of too much concentration of assets, Carlyle plans to make up to 300 investments across different sectors. Similar to its previous fund, no single investment is expected to make up more than 1% of the fund’s investments.

“With the successful closing of CRP IX, we are well-positioned to continue to execute on our strategy of investing behind demographic-related themes, avoiding exposure to cyclical risk, and identifying deep and growing pools of demand,” Robert Stuckey, managing director and head of Carlyle’s U.S. Real Estate team, said in a statement.

Brookfield’s $4 Billion Fund

Global asset manager Brookfield closed its latest flagship real estate debt fund, Brookfield Real Estate Finance Fund VI (BREF VI), with total capital commitments of over $4 billion, exceeding an initial target of $3 billion.

BREF VI extends Brookfield’s real estate debt investment strategy of focusing on lending against high-quality real estate, mostly apartments and retail, in major U.S. metropolitan markets, and selectively in the U.K. and Europe.

It also looks for assets that have valuations that are below long-term intrinsic value.

To date, the fund has closed on 15 investments, representing aggregate mezzanine lending commitments in excess of $700 million.

In a different type of investment, Global Student Accommodation, an international investor in student housing, formed a joint venture partnership with a fund advised by Morgan Stanley Real Estate Investing.

This alliance marks the beginning of a long-term relationship that will pursue strategic growth across the full spectrum of the student housing industry.

To begin this partnership, Global Student Accommodation is seeding the joint venture with $1.6 billion of initial properties with close to 15,000 beds across 21 states and 29 cities.

Stability Sought

These properties include GSA’s existing US portfolio acquired in 2020, along with the recently closed acquisition of more than 8,100 beds across prime locations from coast to coast.

Morgan Stanley’s commitment represents a major endorsement of the stability of student housing in higher education as an investment.

“After careful study of the student housing market, we looked for a scalable opportunity and a best-in-class partner for our entry point — this venture achieves both,” John Klopp, global head of real assets at Morgan Stanley Investment Management, said in a statement.

On the affordable housing front, UMH Properties entered into a joint venture with Nuveen Real Estate to develop and acquire new mobile home parks less than 2 years old.

Nuveen is providing an initial capital commitment of up to $170 million.

“We have long been advocates for the development of new communities and are pleased to have found a partner who understands and shares our vision,” Samuel A. Landy, president and CEO of UMH said in a statement. “This joint venture gives us the financial capacity to develop and acquire new manufactured housing communities,

UMH has entered into agreements to acquire three to-be-built communities that will contain 804 sites in Florida for a total purchase price of $90 million.