(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.
©2021 Bloomberg L.P.
Novel $10.7 Billion Swedish Deal Reinvents Real Estate Finance – BNN
(Bloomberg) — A historic shift in how Swedish property firms fund themselves was already underway before a little-known private company revealed a $10.7 billion acquisition that will put the trend firmly on the map.
Heimstaden Bostad AB — owned by Ivar Tollefsen’s Fredensborg AS and pension funds — says it will use debt capital markets to refinance a jumbo bridge facility for the largest ever private property transaction in the Nordic region.
The deal highlights a shift by real estate companies in the biggest Nordic economy into both bonds and euros. The trend is driven by a quantitative easing-fueled property boom that’s allowing companies to raise more money than is available in the local market.
“The real estate sector has grown so much because companies have replaced secured bank financing with unsecured bond financing,” said Max Berger at DWS Investment GmBH. More broadly, Europe’s property industry has become “the fastest growing in euro investment grade in the last couple of years.”
Since 2010, the number of real estate issuers in the euro investment grade market has increased to 69 from five, according to Berger, who manages 6 billion euros ($7 billion) of bonds. Euros have now overtaken Swedish krona as the main funding currency for outstanding bonds sold by the country’s property companies.
Heimstaden Bostad’s bridge loan “will clearly be refinanced mainly in euro bonds,” said Anders Holmlund, head of bond origination at Svenska Handelsbanken. The banker adds that the domestic krona market “isn’t a realistic alternative” given the short time frame.
The boom in real estate bonds can be seen in its dominance of the Swedish central bank’s balance sheet, where more than half of the Riksbank’s corporate bond holdings come from property companies.
The European Central Bank’s bond-buying program is adding further fuel to the market, according to Holmlund.
And the broader buyer base is allowing Swedish property companies to expand massively. Samhallsbyggnadsbolaget i Norden AB, for example, announced a plan recently to nearly triple its property portfolio size to 300 billion kronor ($34.4 billion) by 2026.
“We will focus more on euro in the future,” Marika Dimming, a spokesperson, said in an interview. “It’s a natural progression for us,” she said, adding that “the trend is also to set up a subsidiary in the euro area so that the bonds can be bought by the ECB in their QE program,” she said.
But a summer rally in Swedish house prices, warnings of excessive valuations in share prices and concerns about a withdrawal of central bank stimulus have stoked concern among politicians and analysts alike.
Equity analysts at Svenska Handelsbanken said they have “a clear negative tilt towards the sector universe,” citing “disturbances in the increasingly important capital markets” triggered by QE tapering as a possible downside catalyst.
Still, euro bond investors are attracted to Swedish residential firms’ risk-return profile compared with western European office companies, said DWS’s Berger.
“Nordic players have provided us with interesting sub-sectors that have defensive characteristics, but trade in line with the wider sector,” the Frankfurt-based portfolio manager said, adding that sub-sector selection within real estate is key to making profitable investments.
“The pandemic has been a good stress test for real estate companies’ balance sheets,” he said. “Even hotel and retail focused companies have weathered the pandemic.”
©2021 Bloomberg L.P.
When it comes to cutting carbon emissions, the real estate industry is running out of time – CNN
Diane Hoskins is co-CEO of Gensler. The opinions expressed in this commentary are her own.
Extreme weather events — including heat waves, droughts and floods — have unfolded all over the world this summer. The grave impact of climate change is upon us and will continue to have a profound impact on human life. But there are still largely untapped actions we can take to reduce the damage.
What Sold: 19 Newport County real estate sales, transactions (Sept. 18 – 24) – What'sUpNewp
Real estate, like any industry, is based on the foundation of supply and demand. Sellers are seeing premium prices for their homes due to low-interest rates and even lower inventory; which makes for a very competitive environment from a buyer’s perspective.
If you’re considering selling or simply want to know what your home may be worth in today’s market, I am offering confidential, complimentary, and no-strings-attached home value analyses to anyone interested. If you have any real estate questions, please give me a call directly at 401-241-1851 or email me at TylerB@remaxnewportri.com.
In the meantime, here’s what sold in Newport County last week.
26 Brown and Howard #201 sold for $2,275,000 on September 24. This 2,556 sq. ft home has 2 beds and 3 baths.
11 Harrison Avenue #D4 sold for $2,295,000 on September 23. This 2,446 sq. ft home has 3 beds and 3 baths.
529 Bellevue Avenue sold for $6,600,000 on September 24. This 7,624 sq. ft home has 5 beds and 8 baths.
14 Homer Street sold for $611,000 on September 24. This 1,573 sq. ft home has 3 beds and 2 baths.
15 Hammersmith Road #14A sold for $775,000 on September 24. This 1,956 sq. ft home has 3 beds and 3 baths.
31 Bowery Street sold for $5,200,000 on September 22. This 6,613 sq. ft home has 11 beds and 10 baths.
11 S Baptist Street sold for $690,000 on September 21. This 1,536 sq. ft home has 4 beds and 2 baths.
13 Holland Street #2 or B sold for $415,000 on September 20. This 1,018 sq. ft home has 2 beds and 2 baths.
14 Brinley Street #1 sold for $300,000 on September 20. This 631 sq. ft home has 1 bed and 1 bath.
154 Eustis Avenue sold for $1,200,000 on September 20. This 2,160 sq. ft home has 3 beds and 2 baths.
11 Sagamore Street sold for $459,000 on September 20. This 1,852 sq. ft home has 3 beds and 3 baths.
109 Wolcott Avenue sold for $1,060,000 on September 23. This 3,800 sq. ft home has 6 beds and 6 baths.
3 Fox Run sold for $399,000 on September 22. This 1,600 sq. ft home has 2 beds and 3 baths.
30 Moitoza Lane sold for $650,000 on September 21. This 1,026 sq. ft home has 2 beds and 1 bath.
297 Glen Road sold for $1,105,000 on September 21. This 2,402 sq. ft home has 4 beds and 3 baths.
66 Rebels Way #BH 26 sold for $586,000 on September 21. This 2,321 sq. ft home has 2 beds and 3 baths.
26 Cherokee Drive sold for $530,000 on September 21. This 2,194 sq. ft home has 3 beds and 3 baths.
12 Ann Avenue sold for $413,000 on September 20. This 1,908 sq. ft home has 3 beds and 2 baths.
Nothing to report.
2156 Main Road sold for $379,000 on September 20. This 1,008 sq. ft home has 2 beds and 1 bath.
Nothing to report.
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