Goldman Sachs Asset Management Raises $3.5B for Global Real Estate Strategy

Goldman Sachs Asset Management has raised $3.5 billion for its latest global real estate strategy, according to a recent announcement by the company, with a portion of that fund already committed to projects in Asia.

The vehicle dubbed Real Estate Investment Partners (REIP) focuses on core-plus and value-add opportunities across a full range of sectors, with the strategy having already made investments in logistics, residential and office opportunities.

“This fundraise reflects the strength, track record and breadth of our global real estate platform. Our tenured team has navigated complex changes in the real estate market over multiple cycles and produced strong outcomes for our clients,” Julian Salisbury, global co-head of Goldman Sachs Asset Management, said in a release last week. “We are focused on delivering consistent risk-adjusted returns for investors and are grateful for their continued support and partnership.”

The capitalisation milestone for the fund management division of the 153-year-old investment bank comes as Goldman Sachs has been putting fresh emphasis on its management of third party capital, with the usually low-key firm gradually raising its profile as it competes with rivals such as Blackstone and Morgan Stanley to raise cash from global institutional investors.

12-15% Returns

With government records showing that REIP was formally established in March of last year,

Goldman Sachs Asset Management has raised capital from the strategy from institutional investors and high net worth individuals, the company said without providing further detail.

Around half of the equity has already been invested according to a recent account by Bloomberg, with the vehicle said to be targeting gross annualised returns of 12-15 percent while maintaining an asset-level loan-to-value ratio of 65 percent.

With markets looking volatile this year in the wake of the pandemic and with new challenges arising following Russia’s invasion of Ukraine, Goldman said that the fund will focus on defensive assets in growing markets and sectors while also emphasising sustainability.

Other People’s Money

While the investment bank is known for investments from its own balance sheet, the real estate investment division of Goldman Sachs Asset Managment has invested over $50 billion of capital in real estate assets since 2012 across strategies spanning from core to opportunistic and using both equity and credit.

In announcing its 75:25 joint venture with Sojitz in March, Goldman said that the strategy would be acquiring $300 million in rental residential properties in Japan this year, and up to $500 million annually thereafter. Mingtiandi has learned that this capital will come from the REIP fund.

In November, Goldman Sachs Asset Management had made clear its intent to ramp up activity in Asian real estate, with Stephanie Hui co-head of alternative investing in the region saying in an interview with Bloomberg that the company planned to allocate $30 billion of capital to property opportunities in the region over the next five years.

Prior to its Sojitz commitment this year, Goldman had formed a $488 million logistics joint venture with China’s New Ease (now part of DNE Group) in July of last year, and in 2018 the firm has teamed up with Blackstone and Gaw Capital Partners to purchase a set of 12 shopping centres in Hong Kong from Link REIT for $1.5 billion.