Chicago-based private equity firm Heitman closed its latest fund with $806M in capital commitments.
Heitman Real Estate Debt Partners III exceeded its $600M fundraising goal as investors continue to pile into real estate credit funds looking to capitalize on market uncertainty.
The fund will aim to provide “creative financing solutions to high-quality sponsors,” the company said in a statement Monday announcing the fund’s close. It is targeting returns that fall between core-plus and value-add strategies.
"As demand for flexible and reliable financing solutions grows, we believe the real estate debt market is well-positioned with attractive opportunities," Jon Lindell, an executive vice president at Heitman and the portfolio manager for the fund, said in a statement.
Heitman has 10 global offices with a debt platform that has $5.5B in assets under management and a total AUM of $48B. The latest fund is sector-agnostic and will invest in “traditional and alternative property sectors,” the company said.
Private equity debt offerings have been a key financial bridge in today’s lending environment, from which banks have pulled back.
Goldman Sachs closed a $7B real estate credit fund in May, Madison Realty Capital raised another $2B for debt offerings in September and private equity firms like Fortress Investment Group and Principal Financial Group have built their own war chests to deploy in the commercial real estate debt market.
Even banks that have pulled back from direct lending into commercial real estate assets are instead investing with Wall Street and private equity firms to lend in the space because the high demand for capital has made returns especially attractive.
“There's plenty of private equity and private cash coming in,” Glenn Grimaldi, CEO of Naftali Credit Partners and the former head of U.S. commercial real estate finance at HSBC, told Bisnow in December.
“The returns that private equity and private credit are getting now look like equity returns at senior debt levels. That's the pitch that I've made to my investors, and we're about to finish up raising $300M.”
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