Morgan Stanley Real Estate announced today that it has successfully completed the closing of the third offering for its Special Situations Fund III (“Special Situations” or “the Fund”), raising an additional $2.5 billion of equity commitments, 63 percent of which came from investors located outside of the U.S. With this closing, Morgan Stanley Real Estate has raised a total of $5.9 billion for Special Situations from institutional investors, High Net Worth individual investors and Morgan Stanley, with the latter representing 23 percent of total commitments.
Special Situations, structured as an open-ended fund, primarily seeks to make non-controlling investments in an array of real estate securities in growth/emerging, developed and distressed markets around the world. As of the end of 2007, Special Situations committed approximately $4.8 billion of equity, with 62 closed investments in China, Australia, India, Russia, Poland, Brazil, Mexico, the U.S., Japan and Western Europe, among other areas. The Fund’s investment professionals form a core group with extensive collaborative experience, maintaining a team presence in each of the regions where it has invested.
John Carrafiell, Joint Global Head of Morgan Stanley Real Estate Investing and President of Special Situations, said, “This substantial additional capital raise for Special Situations is significant, particularly given the current challenging fundraising environment. It demonstrates strong investor support for the Fund’s strategy, underscoring the global breadth of Morgan Stanley Real Estate’s platform and the team’s ability to source attractive opportunities in a volatile market.”
Tim Morris, Managing Director and Chief Investment Officer of Special Situations, said, “With the completion of this successful follow-on equity raise, Special Situations is in an enhanced position with ample liquidity to continue to pursue its flexible mandate and will access investment opportunities now available due to the significant deleveraging occurring globally. Special Situations will continue to provide dynamic real estate companies in the emerging markets with pre-IPO capital, as well as increase its allocation to distressed opportunities, focusing on the debt markets particularly in the developed economies.”
Commenting on the Fund’s investment strategy, Willem de Geus, Managing Director and Global Portfolio Manager of Special Situations, said, “Investors continue to be attracted to the global opportunistic real estate strategy of the Fund despite recent turbulence in the global capital markets. The heavy emphasis on the high growth emerging economies (China, India, Russia, Poland, Mexico and Brazil), the flexibility to invest across the capital structure of real estate companies, and the ability to invest in developments and recurring income-producing assets in all real estate sectors is what makes this fund attractive in the marketplace.”
Special Situations Fund III, which had an initial closing in August 2006, is the third in a series of successful real estate funds. Special Situations Fund I, which is fully liquidated, launched in 1997 and invested primarily in the United States and Asia. Special Situations Fund II launched in 2000 and invested solely in Europe.
Morgan Stanley Real Estate is comprised of three major global businesses: Investing, Banking and Lending. Since 1991, Morgan Stanley Real Estate has acquired $165.0 billion of real estate assets worldwide and currently manages $94.4 billion in real estate assets on behalf of its clients. A complete range of market-leading investment banking services for real estate clients include advice on strategy, mergers, acquisitions and restructurings, as well as underwriting public and private debt and equity financings. As a global leader in real estate lending, Morgan Stanley has offered approximately $210.9 billion of CMBS through the capital markets since 1997, including $44.9 billion in 2007. For more information about Morgan Stanley Real Estate, please visit www.morganstanley.com/realestate.
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