Morgan Stanley, FCP Raise Billions More To Chase Real Estate Returns

Morgan Stanley Real Estate Investing, the real estate investment arm of Morgan Stanley Investment Management, has raised about $3.1B for its North Haven Real Estate Fund X Global. The total exceeds the fundraising target and is larger than its $2.7B predecessor fund, North Haven Real Estate Fund IX Global, according to the company.

The fund is the latest war chest put together by a major investment manager to seek commercial real estate returns. Investors have been particularly aggressive this year, with commercial property sales worth over $25M totaling $138B in the first half of 2021, the highest total for that period since the first half of 2007, Green Street reports.

Investors in Morgan Stanley’s fund include both public and private pension funds, sovereign wealth funds, insurance companies, and wealthy individuals and family offices. Among the investors is the Maryland State Retirement and Pension System, Bloomberg reports, and over 80% of the institutional capital represents commitments from existing North Haven Real Estate clients.

“We’re playing the same tailwind sectors as the vast majority of others,” Morgan Stanley Head of Global Real Assets John Klopp told Bloomberg, referring to industrial and multifamily properties. 

The fund’s three immediate predecessor global funds have acquired over $17B in real estate assets in over 100 separate investments. Morgan Stanley didn’t specify any particular kinds of deals for the new fund, except to say it would make value-add and opportunistic investments worldwide.

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Separately, investor Federal Capital Partners has closed the $1.188B FCP Realty Fund V, which will target income-producing properties in the United States. Counting leverage, the fund will have about $4B of total investment capacity and has already closed on seven investments in Texas, Georgia and New York.

“The response to this fundraise and to our accompanying stated strategic goals was very strong, with a resulting oversubscription and only four months from first close to final,” FCP co-founder and Managing Partner Esko Korhonen said in a statement.

The fund will focus on Class-B and Class-C apartments, as well as multifamily development and value-add commercial office properties, according to FCP, especially in the Southeast and Southwest.

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