REAL ESTATE NEWS

TPG has raised $2.1 billion from its Real Estate Credit Opportunities Fund. Jon Winkelried, CEO of the firm, reported the closure on TPG's third-quarter earnings call, noting that the initial target was exceeded by $600 million or 35 percent.

The fund has eyed investments in real estate credit at what it calls "attractive risk-adjusted returns," aiming to take advantage of depressed valuations in the market and the low available leverage.

"We're seeing our thesis prove out with a fund outperforming its initial return projections and generating double-digit cash-on-cash yields," Winkelried emphasized to analysts.

"TRECO is an important extension of our investment capabilities in both real estate and credit, and we expect to scale this strategy over time."

The bulk of the capital from TRECO's final close came from the insurance sector (40 percent), which is an area the company continues to invest in cross-platform solutions and access points.

Along with TRECO, TPG said it has raked in almost $12 billion of credit capital this year, with its credit dry powder hitting a record of $16 billion at the end of September.

Winkelried believes that the real estate market as a whole has "stabilized," with the San Francisco-based firm leveraging its capital to "acquire high-quality assets that are not typically available for sale."

"Given the strength of our distinctive portfolios, we remain confident as we prepare to launch fundraising campaigns for several of our real estate strategies in the coming quarters," Winkelried said.

In the current state of CRE lending — there's been a shift. Banks are hesitating, with loan balance growth flat year-over-year, as higher borrowing costs, increased regulatory scrutiny and pressures mount, as highlighted in a recent report by Trepp. In the meantime, insurance companies, pension funds and government-sponsored enterprises are growing their exposures to debt in the market.

Source: GlobeSt/ALM