AEW Capital Management busted out binoculars and rifles to hunt for deals and deploy its $1.8B North American real estate fund.

The company closed its largest fund yet in July 2025 amid compelling market conditions, with plans to capitalize on dislocation and mispriced assets. Now interest rates are rising and perceived as volatile, which could pause transaction activity, said Tony Crooks, managing director and senior portfolio manager for AEW's opportunistic strategy. A tremendous amount of debt is also available, forcing fewer owners to sell and slowing the pace of fund deployment. 

But on the fundamentals side, select assets continue to perform well and align with the strategy that AEW set for its fund deployment. Finding them is nothing like shooting fish in a barrel. 

“Three, four years ago, you could pick the right sector and be correct,” Crooks said. “Today, it’s more of a rifle shot. Picking the right market, picking the right sector … those attributes that really will decide your outcome.” 

The fund, which was on the market for more than two years and missed its original goal of $2B, is now about 55% deployed. AEW anticipates going back to the market with a new fund in about a year, Crooks said.

“We've been very measured in our deployment and allocation,” he said.

The initial seed portfolio included positions in senior housing, multifamily, industrial and retail. Those are the primary asset classes AEW has focused on acquiring, depending on the market location.

Going into fund deployment, AEW was highly focused on the distress and potential of senior housing, Crooks said, adding that they’ve bought 16 senior housing properties in 16 months. 

“We have actually been able to execute really well there,” he said. “Those have turned out really well already, because we've seen continuous tightening of the market, tightening of the occupancy, and then supply is really cut back to zero.”

Capital is flowing into the sector due to the lack of development, which is increasing competition and making it harder to find assets at a good basis. AEW is also planning two senior housing developments, which will be the first of the cycle, Crooks said.

On the other end of the spectrum, the multifamily sector has seen copious new development and supply. Crooks expected to see a lot of multifamily assets in the fund, considering the distress that emerged after syndicators rushed into investing in the sector in 2021 and 2022.

Multifamily prices have dropped about 15% to 30% in the past five years, and AEW expected equity to be very distressed or wiped out.

“We thought we'd be talking to a lot of lenders buying those assets from them,” Crooks said. 

The fund has done a few of those transactions, but there is still a lot of liquidity and debt in multifamily today, holding up pricing. 

And while new supply is down considerably from the peak, new deliveries are still hindering rent growth, especially in oversupplied markets like Austin. 

“The ability to earn outsized excess returns for us in this cycle in multi is very constrained,” Crooks said.

AEW has seen good opportunities in the industrial sector, including distressed plays from owners impacted by subdued tenant demand from 2023 to 2025, he said.

“We were able to pick off a few of those,” Crooks said. “The difference was in '26, we saw a substantial improvement in leasing and net absorption, and that's carrying through to the equity, so they're getting a little bit more aggressive.” 

Development is coming to the industrial sector, and AEW also plans to be part of that.

Given the fund is targeting value-add, and retail has been a “bear market” for a decade, AEW has deployed more than expected on retail assets, with particular interest in grocery-anchored and lifestyle centers, Crooks said. 

“We're seeing actual rent growth, finally, out of our retail investments across the firm,” he said. “That gave us more conviction to start dipping our toe, at least for our fund and our strategy, back into the retail space.” 

The fund is also open to office buildings that only require minor renovations. It has bid on multiple office buildings but has not acquired any.

From a capital markets perspective, a tremendous amount of debt liquidity is slowing the fund's deployment, Crooks said. Any asset put out for refinancing gets multiple bids.

Competition from credit markets is higher than JLL has ever recorded, according to quarterly bidding and credit indexes released this week.

That liquidity doesn’t exist on the equity side. Amid historically low sponsor formation, middle-market CRE sponsors control $5.1T of U.S. real estate but are underfunded for their specialized capital needs, according to a KKR & Co. report.

This means that owners are refinancing rather than selling, Crooks said.

“That’s held back a lot of that stress that we would typically have capitalized on in previous cycles,” he said. “The old rescue equity, today, is debt.” 

That has resulted in a lot of kicking the can, but the can is still locatable in certain situations. If the debt wasn’t as available, the fund would already be fully invested, he said.

How long the can will be kicked down the road is anyone’s guess, but many of the loans making up the wall of maturities will be somehow worked out in the next three years. 

There’s also a lot of equity raised for noncore assets that needs to be deployed over the next three years, Crooks said.

“Just watch the leverage, or the debt capital flows,” he said. “I believe that wherever that goes, that's where the market's headed.”