Morgan Stanley Real Estate Special Situations Fund Iii
Introduction
Morgan Stanley Real Estate Special Situations Fund III is a real estate investment fund managed by Morgan Stanley. The fund was launched in 2013 and has a target size of $1 billion. It focuses on investing in distressed real estate assets in the United States and Europe.
Investment Strategy
The investment strategy of Morgan Stanley Real Estate Special Situations Fund III is to acquire distressed real estate assets at a discount and then reposition or redevelop them to increase their value. The fund invests in a range of real estate assets, including office, retail, multifamily, industrial, and hospitality properties.
Target Markets
The fund targets markets with strong underlying real estate fundamentals and significant distress. In the United States, the fund focuses on markets such as New York City, San Francisco, Los Angeles, and Chicago. In Europe, the fund invests in markets such as London, Paris, and Frankfurt.
Portfolio
The portfolio of Morgan Stanley Real Estate Special Situations Fund III includes a range of real estate assets. One example is a 300-unit multifamily property in Los Angeles that the fund acquired at a discount and repositioned through a value-add renovation program. Another example is a Class A office property in Frankfurt that the fund acquired at a significant discount and redeveloped into a state-of-the-art office building.
Performance
Morgan Stanley Real Estate Special Situations Fund III has delivered strong performance since its inception. As of December 31, 2020, the fund had generated a net internal rate of return (IRR) of 18.5% and a net multiple of 1.5x. The fund has also distributed $499 million to investors.
Risks
Investing in real estate involves risks, and Morgan Stanley Real Estate Special Situations Fund III is no exception. The fund may be subject to risks such as interest rate risk, market risk, credit risk, and liquidity risk. Additionally, the fund may face risks specific to the real estate industry, such as tenant risk, construction risk, and environmental risk.
Conclusion
Morgan Stanley Real Estate Special Situations Fund III is a real estate investment fund that focuses on distressed real estate assets in the United States and Europe. The fund's investment strategy is to acquire distressed assets at a discount and then reposition or redevelop them to increase their value. The fund has delivered strong performance since its inception, but investing in real estate involves risks that investors should be aware of.