Goldman Closes Real Estate Credit Fund at $4.2 Billion

May 7 (Bloomberg) -- Goldman Sachs, which shifted its real estate focus to lending from buying properties after the financial crisis, completed fundraising for its second real estate credit pool at $4.2b.

* The New York-based firm raised $1.8b in equity pledges from

institutions and wealthy individuals, supplemented by the

same amount in borrowings and $600m of the firm’s own money,

said Alan Kava, co-head of the real estate investing group

in Goldman’s merchant banking division; about 60% of the

capital pledged came from U.S. investors and most of the

rest was from Europe, with a small amount from Asian

investors * Goldman is competing with other private debt funds,

mortgage-oriented real estate investment trusts and banks in

offering ways to earn higher yields at a time of low

interest rates; the new vehicle will invest in Europe and

the U.S., expanding on Goldman’s first real estate credit

fund, which made about $3.5b of loans, according to a

marketing document * “We will be opportunistic in terms of where we see value,”

Kava said in a telephone interview; “the first fund was

U.S. only. We’re hopeful we will end up with about 50-50”

between the U.S. and Europe * The new Broad Street Real Estate Credit Partners II plans to

make senior loans and mezzanine loans backed by high-quality

commercial real estate, to fund acquisitions, refinancings

and recapitalizations, according to the document; it intends

to generate returns in the “mid-teens” by charging

interest rates of 7 percent to 10 percent and leveraging the


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To contact the reporter on this story: Hui-yong Yu in Seattle at +1-206-262-4146 or To contact the editors responsible for this story: Kara Wetzel at +1-212-617-5735 or Daniel Taub, Christine Maurus

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