Blackstone, Starwood turn to individuals for capital

TRD New York /
Aug.August 22, 2012 02:30 PM

Wealthy individuals are increasingly replacing institutional investors, scared off by memories of the real estate crash, as the source of capital for real estate funds, according to the Wall Street Journal. For example, about 40 percent of Starwood Capital’s latest $2 billion fund comes from individual investors, Carlyle Group sourced 10 percent of its recent $2.3 billion from rich people, Lone Star Capital relied upon individuals for about 20 percent of its $5.5 billion fund and even the Blackstone Group has increasingly turned to high-net worth people for a $13 billion fund it expects to raise.

These investors, from around the world and increasingly from Asia, offer both advantages and disadvantages when compared with traditional pension funds, foundations and endowments, executives noted.

Unlike institutions, individuals act more quickly, are more flexible and often don’t require the same disclosures and reporting information that pension funds demand.

On the other hand, they present a greater risk of reneging on their agreement, are more likely to sue if advertised returns aren’t achieved and make it more difficult to attract institutional investors, which traditionally invest in packs. It’s also less efficient to collect funding from dozens of investors — who must have a net worth of at least $5 million and invest a minimum of $250,000 — than it is from a handful of institutions. [WSJ] — Adam Fusfeld


Related Articles

arrow_forward_ios
Blackstone Real Estate Debt Strategies' Jonathan Pollack (Blackstone; iStock)

Blackstone assembles biggest real estate debt fund ever

Blackstone assembles biggest real estate debt fund ever
Carlyle CEO Kewsong Lee and 24-02 Queens Plaza South in Long Island City (Getty; Atlas Capital)

Carlyle Group pockets $40M LIC trade school building

Carlyle Group pockets $40M LIC trade school building
From left: Joe Biden, Starwood Capital's Barry Sternlicht, Blackstone's Stephen Schwarzman and Donald Trump (Getty; iStock)

Where real estate’s investment giants stand on Biden vs. Trump

Where real estate’s investment giants stand on Biden vs. Trump
Stuyvesant Town (Getty)

Layoffs at Blackstone’s Stuy Town management firm

Layoffs at Blackstone’s Stuy Town management firm
Brookfield’s Bruce Flatt and Blackstone’s Jonathan Gray

Blackstone and Brookfield are going mall shopping in India

Blackstone and Brookfield are going mall shopping in India
Blackstone's Jonathan Gray and a rendering of 350 Park (Vornado, Blackstone)

Blackstone eyes new 1M sf NYC headquarters

Blackstone eyes new 1M sf NYC headquarters
Blackstone Group president Jonathan Gray (Getty)

The future according to Blackstone: “Less density and a lot less new construction”

The future according to Blackstone: “Less density and a lot less new construction”
The coronavirus has been crushing global real estate investment for months, but there are a couple of sectors weathering the storm (iStock)

Here’s how much Covid has crushed global RE investment

Here’s how much Covid has crushed global RE investment
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...