Large-scale commercial real estate development requires large-scale investment. One family may take out a loan to buy a house, but it often takes multiple investors and complicated business relationships to purchase a shopping mall.
One rapidly growing real estate development organization with an Arizona connection is trying to raise $2 billion for a multi-investor fund for property development. The investment firm, TPG Capital, formed its real estate division in 2009, just when the foreclosure crisis was at its worst and others were fleeing the industry. TPG used that opportunity to scoop up real estate assets at a discount.
Among its many investments is a stake in Arizona’s AV Homes Inc., but it also has exhibited an emphasis on apartments, residences for seniors and other commercial real estate. In its pitch to investors, TPG claims that it plans to make one of the biggest investment pools for real estate in the world.
The move comes amid signs that the real estate market recovery is heating up rapidly. Analysts say many investors are now seeking out higher-risk and higher-return real estate investments, instead of the safer investments that they have tried in the past few years.
There are risks in any kind of real estate investment, but the larger the investment and the more people who are involved, the more risks and more potential for legal problems. Large-scale projects require many contracts and business relationships, and each one must be carefully considered and properly managed. It’s important for Arizona real estate companies to have legal help from attorneys who have experience handling these complex enterprises.
Source: Bloomberg News, “TPG Seeks $2 Billion for Multi-Investor Real Estate Fund,” Hui-yong Yu, Feb. 14, 2014