According to the Wall Street Journal, the wealthy are investing billions of dollars into new real-estate funds created to “buy distressed debt back by hotels, malls, office buildings and other commercial properties” experiencing a major plunge amid the pandemic.
These businesses are receiving much-needed relief, as investors (firms including KKR & Co., Kayne Anderson Real Estate, and Terra Capital Partners) are raising funds from wealthy families, sovereign wealth funds, and others aiming to profit from the market change. These firms are taking a gamble and see a major profit, hopefully in the near future.
“With property sales in the commercial-property market nearly inactive, these firms are focusing on real-estate debt getting dumped on the market by troubled real-estate lenders and others,” reads the Journal. The ones who can afford to invest see this as a can’t miss an opportunity, as cash is being raised at an “inconceivable” pace. Kayne Anderson, for example, raised a $1.3 billion fund targeting debt being sold by distressed sellers in roughly two weeks. That type of money usually takes about 12 to 18 months to raise, according to Al Rabil, the head of Kayne Anderson Real Estate. “We had to turn investors away,” Mr. Rabil said. “While there is fear and uncertainty out there, there are investors who are saying...we want to play offense.” # # # To read the full report in the Wall Street Journal, click here: https://www.wsj.com/articles/cash-pours-into-distressed-real-estate-funds-as-investors-aim-to-play-offense-11587470400
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