(Bloomberg) — Morgan Stanley has raised $3.1 billion for a new fund dedicated to global real estate bets, eclipsing the $2.7 billion it raised for a predecessor vehicle in 2018.
The vehicle, known as North Haven Real Estate Fund X Global LP, or ‘G10,’ garnered backing from investors including sovereign wealth funds, U.S. and international pension funds, insurers, high-net-worth individuals and family offices, John Klopp, head of global real assets for Morgan Stanley Investment Management, said in an interview. Maryland State Retirement and Pension System is among the fund’s investors, according to data compiled by Bloomberg.
“We’re playing the same tailwind sectors as the vast majority of others,” Klopp said, citing the firm’s bets on warehouse and multifamily properties. “The fundamentals are extremely strong and have been exacerbated by Covid. There’s an enormous opportunity that’s going to continue for a while in these two areas.”
Morgan Stanley has sought to develop and renovate residential and industrial properties, in part because high demand for so-called stabilized assets has resulted in elevated pricing. The firm is “very interested” in the hospitality sector including hotels, and is watching the office sector while the bar remains high for retail real estate bets, Klopp said.
“In addition to finding off-market opportunities, we’re trying to create or reposition core assets, then sell them,” he said.
The new vehicle kicked off its investment period on Jan. 1 and focuses on single properties and smaller portfolios involving an average equity investment of $60 million. The fund, which has four years to spend its capital, employs maximum leverage of 65%.
“We’re unconstrained as to where we can go and what we can do,” Klopp said, acknowledging that the U.S. market has snapped back faster than Asia and Europe. “We’re not trying to make our money from financial engineering, but are looking to find assets that we think we can transform and create value in through relentless asset management.”
Previous iterations of the vehicle, such as ‘G8,’ which was deployed in 2014 through 2016, had realized annualized net returns of 18% through June 30, according to materials seen by Bloomberg. ‘G9,’ a fund invested between 2016 and 2020, is in the early stages of selling its holdings, having already divested a portfolio of Las Vegas multifamily units operated by Tower 16 Capital Partners, U.K. logistics assets, an office building in Tokyo and grocery stores on the U.S. East Coast.
The vehicle is the latest addition to Morgan Stanley’s alternatives platform, which has over $100 billion in assets under management including $52 billion in real assets, Dan Simkowitz, head of Morgan Stanley Investment Management, said in a statement.
“There’s an enormous amount of capital sloshing around the system today and a lot of it wants to be in real assets,” Klopp said, referencing favorable diversification, returns, and inflation protection provided by infrastructure and real estate.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
