Report: More Real Estate PE Firms Eyeing Distressed

LONDON (Reuters) – Over a third of the capital being raised by real estate private equity funds is targeting distressed debt and assets, as investors hunt for opportunities created by the ongoing credit crisis, a report said on Tuesday.

Private equity real estate funds are currently seeking to raise $253 billion, of which $92.5 billion or 37 percent will be invested in distressed real estate and debt, said research and consultancy group Preqin.

This compares with the record $116.7 billion raised by real estate private equity funds in 2008, of which 26 percent was raised for distressed investments, Preqin said.

“Investors and fund managers alike are looking to take advantage of the opportunities created by the problems in the credit market by investing into real estate debt, distressed debt and distressed situations,” it said.

Such funds are likely to continue to be a popular source of investments in the short-term, Preqin said, citing the $20 billion being raised by U.S.-based Lone Star this year, to invest in distressed assets such as commercial properties and residential mortgages. [ID:nN17379976]

“Investors see distressed and debt funds as good prospects. Many see real estate debt and distressed investments as a promising proposition with the economic climate so uncertain,” said Preqin Real Estate spokesman Ignatius Fogarty.

(Reporting by Daryl Loo; Editing by David Cowell)