Real estate company Dream Unlimited is launching a private equity arm, with plans to raise several billion dollars to invest in commercial property in North America and Germany after the coronavirus pandemic.
The company says the current global economic crisis may create a similar situation to 2011, when Dream founder Michael Cooper launched Dream Global REIT at the height of the sovereign-debt crisis in the European Union. The trust, which mostly held office buildings in Germany and the Netherlands, was sold last year to Blackstone for $3.3-billion.
“It feels a bit like 2011. There was the European debt crisis. There was a lot of dislocation of capital and we thought, in this chaos, there will be opportunities,” said Jane Gavan, president of Dream’s asset management unit who used to run Dream Global. “We feel the same thing now. There is still a lot of money wanting to invest in real estate," she said.
The new division is called Dream Equity Partners. Ms. Gavan will serve as the executive chair and oversee the business. Rahul Idnani, the former global chief operating officer of the US$131-billion Nuveen Real Estate, will serve as Dream Equity’s president and be in charge of developing products and raising capital.
Mr. Idnani said it was too early to put a number on the size of the private equity arm, but said: “We should be raising several billion over the next five years across various strategies.” He said he expects to raise capital for between three to five funds.
To raise capital, Dream will target sovereign wealth funds, high-net-worth individuals and pension funds that do not already have a real estate company.
Mr. Cooper, who has said he wants to expand from publicly traded entities into private capital to buy and develop property much like major real estate players Brookfield Asset Management and Blackstone Group Inc., expects each fund to generate a minimum annual return of 8 per cent.
Dream Equity plans to start marketing the funds in the fall and said it would provide 10 per cent of the funds’ equity either through capital or property.
The trio is finalizing the details of the new business but said they will focus each fund on a type of commercial real estate and or geography, as well as dedicate one fund to what it called “impact” investing or investing in affordable housing and green buildings.
“We think there will be opportunities coming out of COVID with trying to help the government achieve their post-COVID goals to get the economy going and provide more housing that more people can live in and get the economy started,” Mr. Cooper said.
Dream Equity is interested in housing in Toronto and Ottawa and industrial properties in Midwestern U.S. cities. In Europe, the focus is on offices and housing in Germany, a country where Dream already has people on the ground and a level of expertise from running Dream Global.
Dream Unlimited is the holding company for a portfolio of Mr. Cooper’s real estate companies, which includes Dream Asset Management Corp., Dream Office REIT and Dream Industrial REIT.
Mr. Idnani is based in New York, while Ms. Gavan and Mr. Cooper are based in Toronto.
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Rachelle Younglai