The Real Deal New York

Goldman Sachs’ second real estate lending fund raises $4.2B

Firm to focus on 50-50 investment split between U.S. and European properties
May 07, 2014 02:08PM

Goldman Sachs Group has completed fundraising for a second real estate credit pool. The investment bank is targeting property in Europe and the U.S. in an effort to generate higher yields in a low-interest-rate environment.

The New York-based firm raised a total of $2.2 billion in the fundraising round, pooling $1.8 billion in equity pledges from institutions and deep-pocketed individuals, the same amount in borrowings and $600 million of the firm’s own capital, Alan Kava, co-head of the real estate investing group, told Bloomberg Businessweek. Of the capital pledged, 60 percent came from U.S. investors, while most of the rest came from Europe. A sliver was invested by Asian donors.

“We will be opportunistic in terms of where we see value,” Kava told the publication. “The first fund was U.S. only. We’re hopeful we will end up with about 50-50,” referencing the firm’s planned focus on European investments.

The new fund, which has already invested about $500 million, is dubbed Broad Street Real Estate Credit Partners II. Goldman’s first real estate credit fund, known as Real Estate Mezzanine Partners, made 28 investments that were a mix of senior mortgages and mezzanine loans, according to a marketing document cited by Businessweek. [Bloomberg Businessweek]Julie Strickland