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Cerberus Puts Together $2.8B To Pursue Opportunistic Deals

Cerberus Capital Management has raised about $2.8B to invest opportunistically in commercial real estate through an entity called Cerberus Institutional Real Estate Partners V. The total represents more than $2.5B in commitments, plus an additional $300M committed to a dedicated investor fund for CIREP V.


The initial target for CIREP V was $2B, according to Cerberus. With its war chest in place, the fund will invest directly in real estate assets, but also in real estate companies, entities with significant real estate exposure and real estate-related debt, including nonperforming loan portfolios.

Cerberus didn't specify any target markets. The company has about $26B of real estate assets under management in the United States, Europe, Asia, South America and Australia. In recent months, Cerberus has established joint ventures to develop logistics properties, self-storage and cold storage assets.

“There are market dislocations and macrotrends that are driving compelling opportunities across our broad platform,” Cerberus Global Investments President Lee Millstein said in a statement. Millstein is also global head of real estate for the company.

In a separate deal last week, an affiliate of Cerberus and investor Highgate closed on the acquisition of about 185 U.S. hotels totaling more than 20,830 rooms from Colony Capital. The $2.8B deal solidified Colony's exit from hospitality property ownership.

"This transaction provided us with the opportunity to invest in the recovery of the hospitality sector following an unprecedented market dislocation," Cerberus Head of North American Real Estate Tom Wagner said.

There is some indication that the hotel market is indeed on the upswing. During the week of March 14 to March 20, U.S. hotel occupancy came in at 58.9%, the highest level since March 2020, hotel data specialist STR reports

Occupancies were up 93.9% compared with the same week in 2020, STR found, putting it at almost 85% of the 2019 benchmark. Average daily rates also improved, reaching 81% of the comparable 2019 level.