New York Life Makes Foray Into Value-Add With $300M Fund

New York Life Real Estate Investors has closed on its first national value-add vehicle, the Madison Square Value Enhancement Fund, with more than $300M in committed capital. The fund will target U.S. office, multifamily and industrial assets in primary and secondary markets.

Fund investors include New York Life Insurance Co. and Clal Insurance, one of the largest insurance companies in Israel, with more than $50B in assets under management. 

Though New York Life Real Estate Investors is quite active in commercial real estate — it has about $49B in assets under management — this is a new direction for the investor.

"While we invest in value-added transactions through a regional fund and a non-core bucket within our core open-end fund ... this program allows us to meet the needs of third-party investors who are seeking geographic diversification and higher returns," New York Life Real Estate Investors head of business development Paul Behar said in a statement.

Even though there is more competition for value-add properties, especially in markets with strong job and population growth, New York Life Real Estate Investors' move into the sector points to intense investor interest in value-add plays.

The total Madison Square Value Enhancement Fund committed capital is relatively modest compared to some of the value add-oriented funds that have closed in the last 12 months. Starwood Capital Group's Global Opportunity Fund XI, which focuses in part on value-add, totals $7.6B.

So far, 25 value-add funds have closed this year, raising $8B so far, which is more than a fourth of the $27.8B raised by 97 funds in 2017.