Chad Pike wants a high degree of flexibility with his return to private real estate investing. According to an investment presentation, obtained by PERE, his new firm Makarora is asking investors to back a special situations strategy, comprising three sub-strategies. Each is designed to tackle the sequential stages of a market in reset.

The first of the strategies, dubbed in the presentation as ‘yield,’ has a focus on high-yielding, performing credit – that brings downside protection. The second is called ‘hybrid/structured’ and includes assets where the firm can take ‘structurally preferred’ positions and enjoy both reasonable downside protection and upside potential. The third is a more typical private equity real estate style of opportunistic investing –  expected to produce plenty of ‘upside potential.’

It is understandable Makarora has been positioned in this way. Pike’s last strategic focus at mega-manager Blackstone was to establish the firm’s Tactical Opportunities business. The business has grown to $34 billion in size thanks to a series of high-performing funds, dexterously slaloming between private asset classes, including private real estate but also private equity and private credit.

Pike co-founded and played a leading part in the division’s first three funds, and that momentum has continued more than three years after he left, with Fund IV closing in August on almost $10 billion of capital, including sidecars. In one sense, Makarora represents the continuation of the theme of flexibility from this Blackstone business, albeit within the higher risk and return strategies of real estate only.

At a time when institutional investor preferences are increasingly favoring delineated strategies, will Makarora’s bid to break the mold by offering three otherwise distinct objectives in one vehicle work? Such a proposition is certainly rare.

The statistics are not in the New York-based firm’s favor. PERE is yet to finalize 2023’s fundraising total, but 2022 was a record year for sector-specific fundraising, with 36 percent of the more than $215 billion raised generally for private real estate funds. The data we have seen for the first three quarters of 2023 suggests further momentum in this direction. Makarora Real Estate Special Situations is not only sector-agnostic, but debt and equity-agnostic, too.

That said, while the firm is asking for a notably flexible mandate, it also expects to invest the fund heaviest into the first of the three strategies given the current dearth of available finance for real estate sponsors.

The presentation demonstrates how this period will eventually give way to a time of more distressed situations and – if there is time – the tail end of the fund’s investment period could see equity-side, opportunistic deployment. As such, the chances of equal-weight investing in all three strategies is remote. The firm is also only targeting $1.5 billion, which demonstrates a limit to the scale of the bet Makarora is asking investors to make.

Nonetheless, while that is the story of the fund, the headlines remain about a wide and flexible ambition. And as one capital adviser told us: the better an opportunity is framed, the more likely a manager can find backers.

But he also said only a small number of individuals and firms can command a higher degree of freedom. Pike’s Makarora is evidently planning to be among them. As ever, a successful fundraising will be the validating factor.