Goldman Sachs Raises $3.4B for RE Secondaries Fund

Goldman Sachs’ asset management division raised $3.4 billion for its Vintage Real Estate Partners III fund and associated vehicles, making it one of the largest private real estate funds designed to take advantage of liquidity problems faced by other investment managers and their partners, reported the Wall Street Journal.

The amount raised exceeded the previous amount of $2.75 billion collected for its predecessor by nearly 23%.

The commitments in the fund can be utilized to acquire portfolios of real estate fund stakes from institutional investors and to facilitate transactions desired by fund managers who aim to deliver liquidity to all limited partners in a certain fund at once, the Wall Street Journal reported, citing Goldman Sachs.

The fund’s capital can also be lent to fund managers and limited partners who desire liquidity but prefer not to sell assets when the market is in decline.

The fund follows private equity firms Blackstone and Ares Management, both of which have launched secondary funds to invest in property stakes. Blackstone raised $2.6 billion for its Strategic Partners Real Estate VIII fund and related vehicles late last year, while Ares raised $3.3 billion for its Landmark Real Estate IX and affiliated pools.

“We are starting to see more forcing mechanisms…debt maturities, lease renewals, these things that happen periodically and force the need for liquidity,” Harold Hope, head of Goldman’s Vintage Strategies group told the WSJ “This deal-driving need for cash among market participants likely will extend for years.”