Updated: Real estate in focus

Will more PE secondaries specialists raise RE-dedicated vehicles and narrow the fundraising gap?

We recently reported on the gap in fundraising between private equity- and real estate-focused secondaries funds.

It’s hard to know when, if ever, real estate will catch up. Groups like Metropolitan Real Estate and Landmark are raising funds and separate accounts that will bolster overall fundraising figures for RE secondaries, to be sure. But the gap remains wide and could grow wider still as a number of large, multi-billion PE offerings are also in the market, like Strategic Partners’ Fund VI, or expected to come to market soon, like Coller’s Fund VII.

In one of my Friday Letters last month, I wondered why we weren’t seeing more private equity secondaries GPs branching into real estate, which would presumably impact fundraising figures to some degree; since then, there’ve been some interesting developments that suggest more groups are indeed making or evaluating such moves.

StepStone notably absorbed most of the senior team from real estate secondaries firm Clairvue Capital (most of whom were ex-Liquid Realty partners) and is gearing up to launch its debut real estate secondaries fund. No word yet on what kind of sum’s being targeted – Clairvue’s most recent fund raised $115 million last year, but future funds could potentially be larger and benefit from StepStone’s IR network and global reach.

There’s also some market chatter around whether Blackstone-owned Strategic Partners will launch a new dedicated real estate secondaries fund, as the firm’s been scouting talent to manage real estate investments. Historically, Strat Partners has raised dedicated real estate secondaries funds as parallel vehicles to its buyout-focused funds, which also made some opportunistic real estate investments (Fund VI has a 5 percent allocation to real estate, according to documents from longtime investor the Pennsylvania Public School Employees’ Retirement System). A real estate-dedicated hire seems to indicate the firm’s real estate strategy will soon stand on its own. Unsurprisingly, Blackstone’s remaining silent on plans beyond Strat Partners nearly-closed Fund VI, but should it move forward with such an offering, it, too, has a great deal of fundraising muscle it could flex for real estate secondaries.

A prior version of this article indicated Strategic Partners had not previously raised separate real estate funds; it’s now been updated to reflect it has done so in the past, but in parallel with its buyout-focused funds and using the same investment team.