StepStone Real Estate Closes Record-Breaking $3.77 Billion Real Estate Secondaries Fund, Surpassing $4.5 Billion in Total Investment Capacity

Rhea-AI Summary

StepStone Real Estate (SRE), part of StepStone Group (Nasdaq: STEP), has successfully closed its fifth flagship fund, StepStone Real Estate Partners V (SREP V), raising $3.77 billion in primary commitments - marking it as the largest real estate secondaries fund to date. Including co-investments and discretionary vehicles, the total investment capacity exceeds $4.5 billion.

Despite challenging market conditions, SREP V was significantly oversubscribed, with $1.7 billion already committed across 8 investments. The fund attracted diverse global investors, including sovereign wealth funds, pension funds, insurance companies, and wealth management platforms, with increased participation from North American institutions and investors across Europe, Asia, the Middle East, and Latin America.

SRE's advisory practice oversees approximately $170 billion in real estate assets under advisement, conducting over 1,000 manager meetings annually and allocating roughly $17 billion per year across various investments. The fund focuses on GP-led secondaries and recapitalizations of real estate vehicles, particularly during market dislocations.

Positive

• Largest real estate secondaries fund raised to date at $3.77 billion
• Fund significantly oversubscribed despite challenging market conditions
• $1.7 billion already deployed across 8 investments
• Strong global investor diversification
• Substantial advisory practice with $170 billion in assets under advisement

Negative

• Challenging market conditions with value declines in real estate sector
• Historically low transaction volume in the market
• Increased borrowing costs affecting the sector
• Slow fundraising environment in real estate market

Insights

Asset Management Specialist

StepStone's record $3.77B fund significantly expands AUM and demonstrates exceptional fundraising capability in challenging market conditions.

The closing of SREP V at $3.77 billion marks a significant milestone for StepStone Real Estate, establishing it as the holder of the largest real estate secondaries fund raised to date. In the current challenging fundraising environment for real estate, the fund's oversubscription demonstrates exceptional investor confidence in StepStone's strategy and execution capabilities.

When including co-investments and discretionary vehicles raised alongside the fund, the total investment program capacity exceeds $4.5 billion. This represents a substantial expansion of StepStone's assets under management, which directly impacts the company's revenue-generating potential through management fees.

The deployment pace is particularly impressive, with $1.7 billion already committed across 8 investments, and a "large pipeline of transactions currently closing." This efficient capital deployment is crucial for delivering returns and generating performance fees, which typically represent a significant portion of alternative asset managers' revenue.

The broadened investor base is strategically valuable, with the fund attracting "a diverse global investor base, including sovereign wealth funds, pension funds, insurance companies, and wealth management platforms." This expanded institutional relationship network could potentially benefit StepStone's future fundraising efforts across its platform.

Real Estate Investment Strategist

StepStone expertly capitalizes on real estate market dislocation with its record fund, leveraging its proprietary deal sourcing advantage.

SREP V's timing aligns perfectly with current market conditions that StepStone characterizes as creating "unprecedented illiquidity across real estate markets." The combination of value declines, historically low transaction volume, increased borrowing costs, and a slow fundraising environment has created ideal buying opportunities for well-capitalized investors with available liquidity.

StepStone's strategic focus on GP-led secondaries and recapitalizations, rather than traditional passive partner interests, represents a differentiated approach in the real estate secondaries market. This strategy was "pioneered by SRE's founders following the Global Financial Crisis" and gives the firm greater control over asset management and potential value creation.

A significant competitive advantage lies in StepStone's integrated model. Their advisory practice oversees approximately $170 billion in real estate assets under advisement and conducts "over 1,000 manager meetings annually." This creates what StepStone describes as "a distinct vantage point in the market—and a strong edge in deal sourcing and diligence." With approximately $17 billion allocated annually across primary investments, secondaries, and co-investments, StepStone has remarkable market visibility.

The fund's global reach is notable, with increased participation from North American institutions compared to prior fundraises, along with greater commitments from investors in Europe, Asia, the Middle East, and Latin America. This geographic diversification enhances StepStone's position as a global player in real estate secondaries.

SREP V oversubscribed and significantly surpassed target

NEW YORK, April 28, 2025 (GLOBE NEWSWIRE) -- StepStone Real Estate (SRE), the real estate arm of StepStone Group (Nasdaq: STEP), today announced the final closing of StepStone Real Estate Partners V (SREP V), its fifth flagship fund dedicated to GP-led secondaries and recapitalizations of real estate vehicles. With $3.77 billion in primary commitments, SREP V represents the largest real estate secondaries fund raised to date. Including co-investments completed and discretionary vehicles raised to invest alongside the fund, the total investment program exceeds $4.5 billion in capacity.

Despite challenging market conditions and a slowdown in fundraising across the real estate sector, SREP V was significantly oversubscribed, reflecting strong investor confidence in SRE’s differentiated strategy and past performance. To date, SREP V and related separate accounts have committed $1.7 billion across 8 investments, with a large pipeline of transactions currently closing, underscoring the significant demand for liquidity solutions from real estate GPs.

Founded in 2009, SRE was established by Jeff Giller, Partner and Head of StepStone Real Estate, Josh Cleveland, Partner and Head of EMEA, and Brendan MacDonald, Partner and Chief Operating Officer. Since inception, the firm has focused on providing liquidity to real estate funds and their investors during times of market dislocation.

“We believe the combination of value declines, historically low transaction volume, increased borrowing costs, and a slow fundraising environment has created unprecedented illiquidity across real estate markets,” said Giller. “Our strategy—providing liquidity solutions to real estate vehicles and investors when traditional liquidity avenues are challenged—has proven resilient through all phases of the market cycle, and it’s especially compelling today.”

“SREP V attracted a diverse global investor base, including sovereign wealth funds, pension funds, insurance companies, and wealth management platforms," said Cleveland. “The fund saw notably higher participation from North American institutions compared to prior vintages, along with increased commitments from investors in Europe, Asia, the Middle East, and Latin America,” he added.

The success of the fundraise was also driven by the strength of SRE’s broader platform.   “Our advisory practice, which oversees roughly $170 billion in real estate assets under advisement, continues to play a pivotal role in sourcing and evaluating secondaries transactions,” said MacDonald. “We conduct over 1,000 manager meetings annually and have allocated approximately $17 billion per year across primary investments in funds, secondaries, and co-investments. This level of engagement gives us a distinct vantage point in the market—and a strong edge in deal sourcing and diligence.”

SREP V continues a strategy pioneered by SRE’s founders following the Global Financial Crisis, shifting from traditional secondaries focused on passive limited partner interests to control-oriented, GP-led secondaries and recapitalizations.

Latham & Watkins LLP advised on the formation of the fund and Threadmark Partners Limited provided placement agent services.

About StepStone and StepStone Real Estate

StepStone Group Inc. (Nasdaq: STEP) is a global private markets investment firm focused on providing customized investment solutions and advisory and data services to its clients. As of December 31, 2024, StepStone was responsible for $698 billion of total capital, including $179 billion of assets under management. StepStone’s clients include some of the world’s largest public and private defined benefit and defined contribution pension funds, sovereign wealth funds and insurance companies, as well as prominent endowments, foundations, family offices and private wealth clients, which include high-net-worth and mass affluent individuals. StepStone partners with its clients to develop and build private markets portfolios designed to meet their specific objectives across the real estate, private equity, infrastructure, and private debt asset classes.

Contacts

Shareholder Relations:
Seth Weiss
shareholders@stepstonegroup.com
+1 (212) 351-6106

Media:
Brian Ruby / Chris Gillick / Matt Lettiero, ICR
StepStonePR@icrinc.com
+1 (203) 682-8268

FAQ

How much did StepStone's SREP V real estate fund raise in 2025?

SREP V raised $3.77 billion in primary commitments, with total investment capacity exceeding $4.5 billion including co-investments and discretionary vehicles.

What is the investment strategy of StepStone's SREP V fund?

SREP V focuses on GP-led secondaries and recapitalizations of real estate vehicles, providing liquidity solutions when traditional avenues are challenged.

How much has SREP V (STEP) already deployed in investments?

SREP V and related separate accounts have committed $1.7 billion across 8 investments to date.

What is the size of StepStone Real Estate's advisory practice in 2025?

SRE's advisory practice oversees approximately $170 billion in real estate assets under advisement and allocates about $17 billion annually.

Which types of investors participated in StepStone's SREP V fund?

The fund attracted sovereign wealth funds, pension funds, insurance companies, and wealth management platforms from North America, Europe, Asia, the Middle East, and Latin America.