Goldman Sachs Alternatives has raised more than US$3.4 billion in its VREP III fund

Goldman Sachs Alternatives today announced the formation of its third secondary real estate focused fund, Vintage Real Estate Partners III ("VREP III"), valued at US$3.4 billion.

Vintage Strategies within Goldman Sachs Alternatives provides private market liquidity solutions investment opportunities to both GP and LP clients. Goldman Sachs is a long-standing leader in the secondary market, with experience dating back to 1998 and more than $42 billion in assets under management (as of 31 March 2024).

VREP III has been able to raise capital in excess of its pre-set target by engaging a global and diverse group of institutional investors. VREP III represents the largest fund dedicated to investing in secondary market real estate ever established. Its predecessor, the VREP II fund, raised US$2.75 billion.

In May, Goldman Sachs Alternatives announced the completion of fundraising for its West Street Real Estate Credit Partners IV ("RECP IV") fund and related entities, building on the firm's decades of experience in real estate finance. The pool of funds raised by RECP IV amounts to more than $7 billion of real estate lending capacity, including leverage, and including the capital raised under VREP III, the Goldman Sachs Asset Management-owned investment platform has a total of more than $10 billion to be invested in real estate.

Harold Hope, global head of Vintage Strategies at Goldman Sachs Alternatives, said: "We believe the current market environment presents some of the most attractive investment opportunities in the secondary real estate market. As the largest fund ever to operate in this segment, VREP III will be well positioned to take advantage of increasingly attractive opportunities in a market where size is a significant competitive advantage. We are grateful to both our existing and new investors, and with their support, our team will have no limits when it comes to executing deals of all sizes."

The success of the fundraising reflects an appreciation of the Vintage team's 25 years' experience, including 14 years' experience of investing in the secondary property market, and is an acknowledgement that the current investment opportunities are attractive. Demand for liquidity solutions among both LP and GP private real estate funds is high, as the challenging exit environment for this asset class has resulted in a significant slowdown in liquidation in recent years. In addition, rising interest rates have impacted the availability of affordable financing and market participants are increasingly turning to the secondary market for alternative liquidity solutions.

"Investment demand in the secondary real estate market, among both LPs and GPs, is at an all-time high. It is being driven by the turmoil in global property markets and the strong demand for investment liquidity," says Sean Brenan, who heads up the real estate investment business at Vintage Strategies. "We believe that the pressure on real estate will continue for the foreseeable future and we hope that the capital we have raised will allow us to continue to be a partner to real estate participants who are looking for innovative capital solutions to meet some of their liquidity needs."

The Vintage team is distinguished by its many years of experience in executing both traditional LP-side secondary market transactions and non-traditional solutions (e.g. continuation vehicles and portfolio financings) across a range of asset classes, as well as its ability to draw on the broader resources of Goldman Sachs to source, review and execute these investments.

Since the inception of the strategy in place at the VREP funds, the Vintage team has invested more than US$8.9bn across 165 investments in the secondary real estate market. By 2023, the team estimated the value of secondary real estate transactions at US$56.8bn.