{"id":1560,"date":"2007-06-21T08:30:46","date_gmt":"2007-06-21T15:30:46","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1560"},"modified":"2007-06-21T08:30:46","modified_gmt":"2007-06-21T15:30:46","slug":"can-an-8-billion-private-equity-fund-affect-a-1-million-commercial-investor-it-certainly-can","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1560\/can-an-8-billion-private-equity-fund-affect-a-1-million-commercial-investor-it-certainly-can\/","title":{"rendered":"Can an $8 Billion Private Equity Fund Affect a $1 Million Commercial Investor? It Certainly Can…"},"content":{"rendered":"

Addressing several people’s concerns about the state of private equity and the possible assertion that private equity could be the next fallout candidate, I thought I would look into this situation a bit more. For those of you who think that this discussion will be outside of the scope of commercial real estate investing, read on and I am sure you will be pleasantly surprised.<\/p>\n

At the 8th<\/sup> Annual US Real Estate Opportunity & Private Fund Investing Forum<\/a> several very important items of note were mentioned. The most significant item is the increase in fundraising efforts, which has moved up from $35 billion in 2005 to $60 billion in 2006. On the heels of that announcement, Morgan Stately Real Estate has just announced it has raised an $8 Billion fund designed to invest in Real Estate in established and emerging markets.<\/p>\n

Before I discuss how these numbers will affect the common investor, I want to take a step back and clearly outline what a Private Equity Real Estate Fund or Opportunity Fund does. First, these funds begin by raising investment capital. The larger funds typically bring in money from pension funds, hyper wealthy individuals and governments all over the world. Then, they take these funds and make leveraged investments. An $8 Billion fund will probably invest in about $30 Billion worth of real estate. Investors typically expect returns of 12-20% based on the investment strategy and they expect to exit the fund within the span of 7-10 years.<\/p>\n

These funds make a variety of investments. First, they typically invest in all major commercial property types (hotel, industrial, office, retail, and apartments) and minor ones as well (storage units, trailer parks, malls, etc.). Additionally, they may purchase Real Estate Investment Trusts, Mortgage Companies, Real Estate Services firms, etc. With $30 Billion to invest, any and all real estate investments are fair game.<\/p>\n

Over the past 20 years the private equity industry has grown tremendously. While the major players (Blackstone, KKR, etc.) get all the headlines, many smaller private equity firms operate in lower tier investment categories. If KKR looks for Billion dollar deals, these firms will Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Addressing several people’s concerns about the state of private equity and the possible assertion that private equity could be the next fallout candidate, I thought I would look into this situation a bit more. For those of you who think that this discussion will be outside of the scope of commercial real estate investing, read […]<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[3,2,8,26,5],"tags":[],"class_list":{"0":"post-1560","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-blogging","7":"category-general","8":"category-investment","9":"category-lending","10":"category-real-estate","12":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":934,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/934\/ask-the-broker-is-there-any-diversifying-alternative-to-real-estate-investing\/","url_meta":{"origin":1560,"position":0},"title":"Ask The Broker: Is There Any Diversifying Alternative To Real Estate Investing?","author":"Jeff Brown","date":"January 23, 2007","format":false,"excerpt":"Nick writes:Hi. I often scan your site and you seem to have collected a group of savvy and knowledgeable contributors. Here's my question for you and them: What is the opposite of real estate? I know diversification is a smart strategy and many investors limit their risk by investing in\u2026","rel":"","context":"In "Ask the Broker"","block_context":{"text":"Ask the Broker","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/ask-the-broker\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1564,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1564\/the-real-risk-in-real-estate-flipping\/","url_meta":{"origin":1560,"position":1},"title":"The Real Risk in Real Estate Flipping","author":"Cooksquared","date":"June 22, 2007","format":false,"excerpt":"New investors rarely stop to address the subject of risk tolerance. People who have never done a single real estate deal see others making a lot of money in real estate and want to jump right in. 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The scum who\u2026","rel":"","context":"In "Group Therapy"","block_context":{"text":"Group Therapy","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/group-therapy\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-content\/uploads\/2020\/08\/BHBNewTopImage-300x225.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":1463,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1463\/who-says-you-cant-make-money-investing-in-real-estate\/","url_meta":{"origin":1560,"position":3},"title":"Who says you can’t make money investing in real estate?","author":"Greg Swann","date":"May 23, 2007","format":false,"excerpt":"Kirk Kerkorian made $2.6 billion. Yesterday. 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Among the benefits is being alerted to the fact that someone in\u2026","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1566,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1566\/how-do-you-get-to-carnegie-hall-practice-how-do-you-get-to-the-wall-street-journal-online-genius\/","url_meta":{"origin":1560,"position":5},"title":"How do you get to Carnegie Hall? Practice! How do you get to the Wall Street Journal Online? Genius . . .","author":"Greg Swann","date":"June 22, 2007","format":false,"excerpt":"Michael Cook's post on Private Equity investing was picked up as a related-info link by The Wall Street Journal Online. We've been linked from a lot of interesting places, but I think this is the new high-water mark... 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