King Street Capital Management has closed its latest European real estate special situations fund at $950m, reaching its hard cap in just 12 months as signs of distress return to the continent’s property market, according to a report by Bloomberg.
The fund, European Real Estate Special Situations II, is designed to capitalise on opportunities arising from rising interest rates and mounting debt pressure on property owners, particularly in prime urban locations. The raise adds fresh firepower to King Street’s real estate platform, which has already deployed more than €1.5bn in equity and debt across Europe since 2022.
“This is the most dynamic window since the financial crisis,” said Paul Brennan, partner and co-head of global real estate at King Street. “The dislocation is creating a rare opportunity—especially in Europe’s most liquid cities—to access trophy assets at compelling entry points.”
Despite widespread anticipation of distress across European real estate, actual deal flow has been limited, as lenders have largely exercised patience. But King Street has found success by focusing on complex capital structures and leveraging its in-house restructuring expertise and legal navigation capabilities.
A notable example is its acquisition and profitable sale of Venice’s Bauer Hotel, part of the collapsed Signa Group. King Street took control through junior debt and a Luxembourg share pledge, ultimately selling the property for over €300m.
Founded as a hedge fund in 1995, King Street now manages $29bn across credit and equity strategies, with real estate becoming an increasingly important focus. About one-third of its $2.3bn global special situations fund is also now invested in property.
The firm has broadened its platform through strategic hires from Brookfield, Starwood Capital, and Strategic Value Partners, and continues to expand into high-demand sectors such as student housing and logistics across Southern and Western Europe.
