Cottonwood Group, a downtown Los Angeles-based private equity real estate investment firm, reported closing a $1 billion fund for its Cottonwood Real Estate Special Situations Strategy.
The fundraise doubled its original goal of $500 million, said Alexander Shing, co-founder of Cottonwood.
“We are extremely appreciative of the trust and support received from our U.S. and global institutional investors, allowing us to reach this important milestone during a period where private equity real estate fundraise is at a decade low,” said Shing, who also serves as the firm’s chairman and chief executive.
“This underscores the confidence of our investors in Cottonwood’s investment platform that allows us to remain agile during market cycles, invest across the full capital stack, and execute complex development or restructuring when required to unlock value,” he said.
The fund will support projects in Cottonwood’s special situations investment category, which includes capital vehicles that require financial restructuring. The funds also will support projects with real estate credit, Shing said, and more selectively real estate equities.
Midyear outlook
“Our target is U.S. real estate in high-growth and gateway cities,” Shing said. “Reinvesting is permissible if the opportunity set continues to be ripe.”
In its 2025 Midyear in Review, Cottonwood said that commercial real estate for the rest of the current year will be one shaped by “slow real growth combined with persistent inflation.”
“We are positioning our portfolio as follows: 70% to credit opportunities, 20% to structured equity and preferred instruments, and 10% to opportunistic equity. Our highest conviction lies in multifamily assets in infill locations, value-add retail with experiential overlays, and industrial facilities near Tier 2 metros with supportive infrastructure investment,” the company said in its report released Aug. 12.
“Conversely, we are steering clear of high-vacancy urban offices without a clear conversion plan, ground-up multifamily in oversupplied zones, and long-duration fixed assets lacking visibility on exit or refinance,” the company said.
Cottonwood has invested in some high-profile real estate deals in the Los Angeles area. In 2022, it closed a $62 million loan for 8850 Sunset Boulevard, a mixed-use project that included condominiums, a hotel and a redesign of the popular nightclub Viper Room.
