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New York Life Makes Foray Into Value-Add With $300M Fund

New York Life Real Estate Investors has closed on its first national value-add vehicle, the Madison Square Value Enhancement Fund, with more than $300M in committed capital. The fund will target U.S. office, multifamily and industrial assets in primary and secondary markets.

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Fund investors include New York Life Insurance Co. and Clal Insurance, one of the largest insurance companies in Israel, with more than $50B in assets under management. 

Though New York Life Real Estate Investors is quite active in commercial real estate — it has about $49B in assets under management — this is a new direction for the investor.

"While we invest in value-added transactions through a regional fund and a non-core bucket within our core open-end fund ... this program allows us to meet the needs of third-party investors who are seeking geographic diversification and higher returns," New York Life Real Estate Investors head of business development Paul Behar said in a statement.

Even though there is more competition for value-add properties, especially in markets with strong job and population growth, New York Life Real Estate Investors' move into the sector points to intense investor interest in value-add plays.

The total Madison Square Value Enhancement Fund committed capital is relatively modest compared to some of the value add-oriented funds that have closed in the last 12 months. Starwood Capital Group's Global Opportunity Fund XI, which focuses in part on value-add, totals $7.6B.

So far, 25 value-add funds have closed this year, raising $8B so far, which is more than a fourth of the $27.8B raised by 97 funds in 2017.