Morgan Stanley Real Estate has closed its third special situations fund on $2.24 billion (€1.76 billion) and has already invested $1.2 billion of the equity commitments to date. The fund closing represents the second billion-dollar vehicle closed this week by the real estate arm of the New York-based investment bank, which also closed its fifth US real estate opportunity fund on $1.75 billion.
The open-ended special situations fund targets investments in real estate companies in both emerging and developed markets. Although the fund will deploy growth capital in emerging markets such as China, India, Russia and Central and Eastern Europe, in developed markets, it will target arbitrage-created opportunities and opportunities created by corporate financial restructuring. Developed markets may include Japan, the UK, the US, Western Europe, Hong Kong and Korea, according to a statement from Morgan Stanley.
“Significant investment opportunities still exist in the global real estate markets whether it is in growth areas where real estate is vastly undersupplied; in distressed markets where real estate is undervalued; or developed markets where considerable pricing inefficiencies exist between public and private valuations,” said Tim Morris, managing director and the chief investment officer of the fund, in a statement.
The predecessor to this fund, launched in 2000, invested only in Europe. However, the real estate group’s first special situations fund, which launched in 1997, invested primarily in the US and Asia.
Although it is open-ended, the fund carries a three-year lock-up, offering investors a structure that provides greater liquidity than traditional private equity real estate funds, according to the statement.