After a long, painful recovery from the last bust, Morgan Stanley is returning to real estate in style.
The massive investment firm raised $1.7 billion for its first higher-risk real estate fund since 2007, with major commitments from the likes of CIC and Australia’s sovereign wealth fund.
Since the financial crisis, the firm’s real estate operation has focused on buying “core” properties — fully leased buildings in premium locations. The new fund will concentrate on “opportunity” investments, such as new developments, land and buildings in need of refurbishment. The fund will seek returns of 20 percent or above.
Behind the story:
“The market is insanely competitive right now,” said John Klopp, co-chief executive of the real estate unit at Morgan Stanley, told the Wall Street Journal. “There’s a ton of capital chasing real estate in every market in every nook and cranny.”
The fund has already committed about a third of its equity, with 10 deals closed and seven more on the way. Morgan Stanley’s fund has bought in the U.S., U.K., Austria, Japan and Australia.