Strategic Partners has held the final close on its seventh flagship real estate secondaries fund, sister publication Secondaries Investor has reported.
The New York-based Blackstone subsidiary raised $1.9 billion for Strategic Partners Real Estate VII and related vehicles, according to a statement. This represents an increase of $600 million on its 2015-vintage sixth fundraising program, according to PERE data.
Fund VII had a target of $1.5 billion, according to a source with knowledge of the matter. The fund’s strategy is to build a diversified portfolio of Class A assets in gateway cities at a discount to where they would trade in the direct market.
“We have one of the market’s largest real estate portfolios, spanning interests in over 4,500 assets held by over 420 underlying real estate funds. Our ability to partner with both investors seeking liquidity and operators seeking strategic portfolio solutions will allow us to put capital to work in a wide range of real estate opportunities globally,” said senior managing director and head of Strategic Partners Real Estate Mark Burton in the statement.
Strategic Partners is understood to be looking at a strong pipeline of GP-led opportunities, including managers looking to liquidate assets in mature funds and funds in need of extra liquidity to take advantage of opportunities brought about by the pandemic.
The market for portfolios of limited partnership stakes is largely on hold until valuations become clearer and prices adjust to reflect market conditions, which could mean later this year or 2021, according to several market sources.
Fund VII is likely to be split roughly 50/50 between vanilla and complex deals, though this will change depending on the opportunities available, Secondaries Investor reported.
Fund VII is the third real estate secondaries vehicle to hold a final close this year, following Goldman Sachs’ $2.75 billion Vintage Real Estate Partners II and the $1.2 billion Madison International Real Estate Liquidity Fund VII.
Secondaries Investor reported last week that Canadian giant Brookfield Asset Management had become the latest big name to enter the market, hiring Partners Group’s Fabian Neuenschwander and Marcus Day to support its efforts.
Real estate secondaries volumes reached a three-year high last year, according to data from Landmark Partners. Some 127 transactions, representing approximately $7.2 billion of net asset value, closed or were placed under contract in 2019.