Global alternative asset manager TPG is ready to "play offense" in real estate deals after closing its inaugural opportunistic real estate credit fund that exceeded investment targets.
The TPG Real Estate Credit Opportunities fund raised $2.1 billion, exceeding its initial $1.5 billion target by more than 35%. TPG's CEO Jon Winkelried said the firm's clients are expressing a growing interest in real estate funds because of the significant shift in market conditions.
"In real estate, we are well-positioned to play offense," Winkelried said during TPG's Tuesday earnings call, referring to the firm's $12 billion in dry powder and value of its real estate portfolio. "Over the past two years, we've capitalized on the substantial market dislocation to acquire high-quality assets that are not typically available for sale."
Winkelried told investors the firm is seeking to raise even more funds for real estate and expects 2026 to be an important and significant year for the business. TPG, with dual headquarters in Fort Worth, Texas, and San Francisco, plans to launch new fundraising campaigns for several of its real estate strategies in the coming quarters.
Winkelried told investors that TPG identified early on "a compelling opportunity" to invest in real estate credit at attractive risk-adjusted returns given "the significant contraction in valuations and available leverage."
Portfolio values rise
At the close of the third quarter, TPG's real estate portfolio, including data centers, residential and industrial investments, appreciated 3.5% with a nearly 16% jump in the past 12 months.
Meanwhile, TPG AG's real estate portfolio, formed after TPG purchased Angelo Gordon, appreciated 2% in the third quarter from the second quarter and grew 3.5% over the past year.
"In real estate, we had our most active deployment quarter so far this year with $1.9 billion invested across TPG and TPG AG real estate," Winkelried said on the call.
In the third quarter, TPG Real Estate Partners completed its acquisition of the former Broadcom office campus in Palo Alto's Stanford Research Park in a partnership with Harvest Properties. The sale of the 13-building, 1.1-million-square-foot campus represented the largest property sale on a per-square-footage basis in the park's history, Newmark executives said in announcing the deal in late September. Newmark represented the seller in the deal.
The Broadcom purchase represented TPG Real Estate Partners' strategy of "selectively investing in office markets where we see compelling green shoots emerging, such as the San Francisco Bay Area," Winkelried said. "We believe the Bay Area is reaching an inflection point in demand, driven by the growth in AI-focused tenants."
TPG has also made some high-profile office purchases in New York and Dallas this year. Recently, TPG loaned $100 million to Harwood International with the funds backing several Dallas properties in the Harwood District near the American Airlines Center, as reported by CoStar News.
TPG also purchased four Dallas office towers from Harwood International, including Harwood No. 2, Harwood No. 6, Harwood No. 7 and Harwood No. 10, between September and October, according to Dallas County deeds and CoStar data. In all, the office buildings total more than 935,000 square feet of space. TPG did not respond to requests from CoStar News about the acquisitions.