Europe

The manager has established a regional sidecar to invest alongside its flagship opportunistic global fund for the first time.

Pollack will be joining the firm at a time when alternative lenders are expected to be able to significantly increase their market share.

Investors may be amenable to investment period extensions in today’s climate, but lengthening the fund term could have more serious implications.

Banks’ commercial real estate loan loss provisions and managers’ cash reserves are under the microscope. But calls for prudence are too little, too late.

The Hong Kong-based firm has received an initial commitment of more than $400m from an anchor investor in the fund.

In a highly illiquid private real estate market, investors will need to get comfortable with longer deployment periods – and managers will need to contain any adverse impact.

Ares Management data shows deal volume for the asset class fell 21% in 2023 from the record $12.4bn clocked the year prior.

German lenders including Deutsche Pfandbriefbank are seeing their share prices impacted by US commercial real estate exposure.

Although 38% of investors were overallocated to the asset class in 2023, only 27% plan to invest less capital this year.

The private real estate arm of Morgan Stanley has agreed an additional year to deploy the fund’s capital amid market challenges.