Alex Shing On Cottonwood Group’s $1B Special Situation CRE Fund

In a world where private credit fundraising is bursting at the seams, Cottonwood Group just closed its largest fund to date. 

The Los Angeles-based real estate private equity firm, founded by CEO Alexander Shing, announced earlier this month it had closed $1 billion for Cottonwood Real Estate Special Situations Strategy, a closed-end fund that will invest credit and equity into industrial logistics warehouses, data centers, multifamily apartments and new developments, as well as capital stack restructurings. 

Shing told CO that the first closing occurred in late April 2024, and that the firm expected to end fundraising in April 2025 but held out until Aug. 31 so the firm could process the full demand. 

“Over our 13 years, we basically have experience investing in every asset class and property type, and have done sales, residential assets, industrial assets and data centers,” he said. “Our philosophy isn’t to concentrate on one property type, but really to cherry-pick the best opportunity across all the markets we cover.” 

The 40-person firm has already invested $300 million from the fund. Bloomberg first reported news of the fund’s closing on Sept. 9 and noted that the vehicle initially planned for only a $500 million raise and has generated an internal rate of return of 20 percent with its initial investments. 

Shing told CO that since it took 13 years to build the firm’s platform into a competent, well-regarded vehicle, the firm leans into its strength on new development, as well as an investment strategy that picks “the best risk-reward.” 

The firm currently manages $2.5 billion in capital and has made more than $7 billion in capital commitments since its 2012 founding. 

“One billion dollars isn’t $30 billion. We’re not a mega manager like Blackstone, so to put out $1 billion over the course of three years with reinvestment, you can be pretty selective in the U.S. real estate market,” Shing explained. “We invest up and down the capital stack. … We do firmly believe that even though we’re not developers, we have strong development capability.” 

Deals that the Cottonwood Real Estate Special Situations Strategy fund has already invested capital into include 262 Fifth Avenue, a 54-story luxury apartment of 26 units in Manhattan, and the planned redevelopment site in Los Angeles that holds the famous Viper Room nightclub, per Bloomberg. The fund is also likely to deploy $240 million in debt into the St. Regis Residences in Boston, a 114-unit luxury condominium in Beantown. 

Shing told CO that investors into the fund include Fubon Financial Holding Company of Taiwan, Korea Investment Holdings and the North Atlantic States Carpenters Benefit Fund. 

“We have never believed in single property type, single geography-type investing,” he said, when asked about his firm’s investment ethos. “It was always to look for the best real estate across the board.” 

Brian Pascus can be reached at bpascus@commercialobserver.com.