Hedge funds have been increasingly allocating capital into real estate assets over the past decade. While some hedge funds directly own and operate real estate properties, many gain exposure by investing in REITs, real estate private equity funds, or real estate debt. According to recent rankings by PERE, the top 10 largest real estate private equity firms had over $450 billion in real estate assets under management in 2020. The leaders among these top real estate hedge funds and private equity firms were Blackstone, Brookfield Asset Management, Starwood Capital, GLP, and Lone Star Funds. These mega real estate investors have been aggressively expanding their portfolios across property sectors like office, retail, logistics, multifamily, and hotels globally. Their strategies tend to focus on core plus, value-add, and opportunistic plays targeting high cash yields. As the real estate market evolves, these major players continue to make bold bets scaling their platforms.
Blackstone dominates with over $160 billion in real estate AUM
Blackstone emerged as the largest real estate investment manager globally with over $160 billion in real estate assets under management as of 2020. The alternative asset manager operates a massive portfolio of real estate across property types and geographies through its opportunistic real estate funds as well as its REIT arm, BREIT. Blackstone remains bullish on logistics real estate in particular, exemplified by its acquisition of $18.7 billion in logistics assets from GLP in 2019. The firm also continues to be active in office, retail, multifamily and hospitality. Well-known assets Blackstone owns include Hilton Hotels, SeaWorld, La Quinta Inns & Suites, and Brixmor shopping centers. With its scale and track record, Blackstone is primed to continue leading among real estate mega funds going forward.
Brookfield focuses on core markets like the US, Europe, and Australia
With over $290 billion in total assets under management, Brookfield Asset Management operates one of the largest real estate investment platforms targeting markets in North America, Europe, the Middle East, Australia, and Asia. The Toronto-based alternative asset manager categorizes real estate into several key areas: office, retail, multifamily, hospitality, self storage, triple net lease, and industrial. The US is a major market for Brookfield, where it owns 170 properties encompassing over 1.5 billion square feet of retail space alone as of Q1 2020. Brookfield also raised a $5 billion fund in May 2020 dedicated to providing rescue financing for cash-strapped retailers struggling from the pandemic. With its strong positioning and access to capital, Brookfield is poised to continue its leadership in taking advantage of real estate investment opportunities globally.
Starwood Capital exceeds $60 billion in real estate AUM
Starwood Capital Group is a leading private investment firm focused on global real estate, energy infrastructure, and oil and gas investments. Since its founding in 1991, the firm has raised over $45 billion in equity capital and currently manages over $60 billion in assets. Starwood Capital operates a diverse real estate investment platform spanning opportunistic real estate funds, real estate credit, hotel brand management, and publicly traded REITs. The firm has been particularly active in acquiring distressed real estate debt and assets, including the purchase of $4.5 billion in non-performing loans from Corus Bank during the Global Financial Crisis. With its strong track record and breadth of real estate capabilities, Starwood Capital stands poised to continue deploying major capital into compelling opportunities.
GLP transforms into a leading global logistics real estate player
GLP has emerged as one of the foremost logistics real estate investors in recent years with over $90 billion in assets under management globally. The firm operates logistics real estate funds focused on China, Japan, Brazil, Europe, India, and the US. In 2017, a Chinese consortium acquired GLP for $11.6 billion and took the company private. GLP’s major backers and LPs now include Hillhouse Capital, Hopu Investment, Bank of China Group Investment, and SMG Eastern. The privatization enabled GLP to turbocharge its growth, expanding assets under management by over 50% since 2017. As global e-commerce growth continues to drive demand for modern logistics facilities, GLP is well-positioned to capitalize on the sector’s tailwinds.
Lone Star Funds targets distressed real estate and global opportunities
Lone Star Funds is a leading private equity firm focused on distressed assets, corporate divestitures, and real estate. The company was founded in 1995 and has raised over $85 billion in equity capital across 20 private equity funds to date. In real estate, Lone Star Funds targets opportunistic investments across property types and geographies. The firm’s strategy focuses on complex and distressed opportunities where it can acquire assets at discounted valuations. Lone Star then seeks to create value through repositioning, redevelopment and intensive asset management. The firm sees particular opportunities today in acquiring discounted CMBS loans and securities. With its flexible mandate and expertise in complex real estate situations, Lone Star Funds is likely to continue deploying major capital globally.
The top real estate hedge funds and private equity firms like Blackstone, Brookfield, Starwood Capital, GLP and Lone Star Funds manage billions in real estate assets across property sectors and regions. They continue to take advantage of opportunities amid property cycles to acquire value-add and opportunistic real estate assets worldwide.