Depressed commercial property prices have prompted a wave of interest in the market with up to 16 firms currently working on or readying plans to launch real estate funds.
Blackstone ( (BX)
), the New York-listed financial services firm, heads the list with plans to raise around $2bn (£1.2bn) in Europe for a new Special Situations real estate fund.
The fund will look to buy up cheap real estate debt rather than equity. Blackstone recently raised $400m from high-net-worth individuals for a similar segregated fund. The cash was raised in just three weeks.
A source said: "There is incredible dislocation in the market. The opportunities in the real estate debt market are staggering. I don't think the raising is a signal that we've hit the bottom of the market by any means. "But there are some incredible bargains to be had in the debt arena. And Blackstone could have a relatively free ride given the travails at the property arms of some of its main rivals."
Mike Hussey, who last week quit the FTSE 100 giant Land Securities ( (LAND.L)
), where he ran its £5bn London property portfolio, is also believed to be readying a fund launch. The size of the raising is the subject of considerable City rumour. Mr. Hussey was unavailable for comment.
Others looking to tap the City for property cash include Cobra, a relatively unknown group looking for £300m; Rugby London, a £100m spin-off of the listed Rugby Estates ( (RUES.L)
); Threadneedle, which is in talks about a £300m fund; and perhaps even a former Lehman Brothers team, which failed in a management buyout from the bank's new owner, Nomura.
David Tye, the chairman of Rugby Estates, said that his new fund would be set up with either private equity backing or through a listing on the London Stock Exchange. This would represent the third incarnation of his Rugby empire. Mr. Tye said that he had just resumed talks to form the fund, having dropped the idea shortly after Lehman Brothers' collapse last autumn. "The buying of property assets is now looking very attractive," he said.
The sector's most lauded recent fundraising example was Max Property Group ( (MAXP.L)
), the brainchild of industry giant Nick Leslau. Max raised £220m through a listing on the Alternative Investment Market (AIM)—the junior stock exchange—last month. It was the first flotation of 2009. The value of the company surged 30 per cent on its first day of trading.
David Lockhart, the former head of the Halladale property group, revealed plans just last week to raise as much as £200m through his NewRiver Retail investment fund on AIM.
And Vincent Tchenguiz, the millionaire property entrepreneur, unveiled plans last week to raise £2bn to restructure debt and build capital.