Property rush as billions raised to pick up bargains
Simon Evans and Mark Leftly, The Independent on Sunday – 21 June 2009
Depressed commercial property prices have prompted a wave of interest in the market with up to 16 firms currently working on or readying plans to launch real estate funds.
Blackstone, the New York-listed financial services firm, heads the list with plans to raise around $2bn (£1.2bn) in Europe for a new Special Situations real estate fund.
The fund will look to buy up cheap real estate debt rather than equity. Blackstone recently raised $400m from high-net-worth individuals for a similar segregated fund. The cash was raised in just three weeks.
A source said: “There is incredible dislocation in the market. The opportunities in the real estate debt market are staggering. I don’t think the raising is a signal that we’ve hit the bottom of the market by any means. “But there are some incredible bargains to be had in the debt arena. And Blackstone could have a relatively free ride given the travails at the property arms of some of its main rivals.”
Mike Hussey, who last week quit the FTSE 100 giant Land Securities, where he ran its £5bn London property portfolio, is also believed to be readying a fund launch. The size of the raising is the subject of considerable City rumour. Mr Hussey was unavailable for comment.
Others looking to tap the City for property cash include Cobra, a relatively unknown group looking for £300m; Rugby London, a £100m spin-off of the listed Rugby Estates; Threadneedle, which is in talks about a £300m fund; and perhaps even a former Lehman Brothers team, which failed in a management buyout from the bank’s new owner, Nomura.
