Soros Said to Raise $1 Billion for Europe, Japan Real Estate
Billionaire investor George Soros has raised a $1-billion fund to invest in real estate in Western Europe and Japan, betting those markets will do better than the U.S., a person familiar with the situation said.
Soros has put some of his own money into Soros Real Estate Investors, managed by Soros Real Estate Partners, with the rest coming from pension funds, endowments and other institutional investors, the person said. Soros spokesman Michael Vachon declined to comment.
The fund highlights the increased appetite among large investors for real estate, characterized by long leases and predictable cash flows, after a 62% decline in the Nasdaq composite index since peaking in March 2000. Morgan Stanley, Dean Witter & Co., Goldman Sachs Group Inc. and Starwood Capital Group Inc. are among those who raised $1 billion or more this year to buy property, leading some analysts to say the market is becoming overcrowded.
“Some money is fleeing the tech sector and coming back into real estate,” which is viewed “as a solid investment,” said Sandy Presant, national director of opportunity fund services for Ernst & Young’s real estate practice.
The Morgan Stanley REIT index, which measures the performance of 109 publicly traded real estate companies, is up 14% this year, compared with a decline of 22% for the Nasdaq composite index.
The 71-year-old Soros has about $4.5 billion invested in real estate and private equity. Soros may be best known for making $1 billion in a 1992 bet against the British pound. Forbes magazine has estimated his personal fortune at about $6 billion.
Last year, Soros began cutting back Soros Fund Management, which he built into the world’s biggest hedge fund group. At its peak in 1998, the business managed $22 billion. In April 2000, Soros said he would “use less leverage and aim at more stable returns.”
Instead of buying properties directly, Soros has focused on buying stakes in companies in the real estate business.
The Soros real estate fund is being managed by Dang Phan, 40, formerly of Credit Suisse First Boston, where he was chief operating officer and chief financial officer of the DLJ Real Estate funds.
