TPG To Unleash $14B On Buying High-Quality Assets

Private equity titan TPG is gearing up to purchase top-shelf real estate assets, with $14B in dry powder across its real estate businesses ready to deploy.

TPG CEO Jon Winkelried said on the Tuesday earnings call that the firm has seen a significant increase in investment activity since mid-2023, and it has itself acquired a number of distinctive high-quality assets from sellers in need of liquidity. He anticipates that trend continuing. 

“With combined dry powder of $14B across our real estate businesses, we expect to lean into the growing number of interesting opportunities we are sourcing in our core areas of focus,” Winkelried said during the Q2 earnings call.

TPG invested $1.2B in real estate acquisitions in the second quarter, including buying two Manhattan office buildings for residential conversion. The private equity firm paid $150M for 222 Broadway in a joint venture with GFP Real Estate and more than $100M for 101 Franklin Street. 

The office tower at 222 Broadway lost a significant chunk of value since it last traded hands in 2014, when Deutsche Bank’s asset management arm, DWS, acquired the property for $502M. The 101 Franklin Street property also took a markdown from the $205.5M Columbia Property Trust and Normandy Real Estate Partners paid for the building in 2019.

“We acquired the properties at a significant discount to their prior basis, and we’re working with best-in-class partners to execute these conversions,” Winkelried said.

In the back half of 2023, when more properties began to see some distress, the firm began amping up its capital deployment, he said. This year has seen a broader acceleration of capital into some of the real estate sectors that are “a bit more defensive.”

Winkelried said TPG would be careful about where it deploys capital, especially favoring the student housing sector and certain industrial properties. 

The company is still cautious on office assets and is becoming warier on the hospitality side.

“We were probably more measured at the beginning of ... the upward interest rate cycle,” he said. “We expected that over time, as a result of some stress in the system, we would see interesting assets be available for sale. And that’s exactly what’s happened.”