TPG Real Estate, the CRE arm of alternative asset firm TPG, closed its fourth in a series of opportunistic investment funds. TPG Real Estate Partners IV (TREP IV) was oversubscribed, according to a company press release, and claims total commitments of more than $6.8 billion.
"TREP IV was formed as a continuation of TPGRE's opportunistic real estate fund series," the company said. "Its strategy focuses on thematic investing primarily in property‐rich platforms and strategic portfolio aggregations in the US and Europe. Since inception, TPGRE has invested and committed approximately $9.1 billion of equity in line with this strategy."
Opportunistic strategic is ordinarily a staple, but current conditions seem to make it particularly apt for CRE investment in the near future. With rising inflation and interest rates and many properties and projects facing financing renewals on previous loans with low rates and higher leverage, there may be opportunities for those with sufficient resources available, as many sources have told GlobeSt.com in recent months.
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Other warning signs have been flashing since the summer. Federal banking regulators at a number of agencies—Office of the Comptroller of the Currency, Treasury; Federal Deposit Insurance Corporation; National Credit Union Administration; and the Federal Reserve—published in the Federal Register a proposed change to a 2009 policy addressing commercial real estate loan accommodations and workouts, with modifications for changes in GAAP accounting standards.
"The proposed statement would build on existing guidance on the need for financial institutions to work prudently and constructively with creditworthy borrowers during times of financial stress, update existing interagency guidance on commercial real estate loan workouts, and add a new section on short-term loan accommodations," the proposal said. "The proposed statement would also address recent accounting changes on estimating loan losses and provide updated examples of how to classify and account for loans subject to loan accommodations or loan workout activity."
It reads like preparation for an expected increase in CRE loans that will need assistance and helps set the stage for why investment companies and funds are thinking about the opportunities that might occur.
For example, in its latest quarterly earnings release, Prologis CFO Timothy Arndt specifically said, "We have significant liquidity, low leverage and investment capacity to support our operations and to allow for opportunistic investments."
Transwestern's opportunistic investment arm, Transwestern Ventures, landed $122 million for its debut fund, Transwestern Ventures Partners I. The company said that its initial target was $100 million.
"We are focused on investing behind themes backed by either long term secular trends or dislocations caused by capital market volatility," the release quoted Avi Banyasz, partner and co-head of TPG Real Estate. "With the close of this fund, we have more dry powder than at any other time in TPGRE's history."
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