New research from Preqin shows that closed-end private real estate fund managers have US$110bn of equity available to make new investments in North America as of March 2014, an all-time high and an increase on the US$106bn in dry powder available as of December 2013 and US$89bn as of December 2012.
Although North America-focused closed-end private real estate fundraising fell in Q1 2014 compared to the previous quarter, the aggregate US$8.7bn raised by the 12 North America-focused funds that held final closes in the quarter is a significant increase in terms of capital raised on the US$4.6bn garnered by the 24 funds that closed in the same time period last year (Q1 2013), demonstrating a relatively strong fundraising environment. North America-focused private real estate funds closed in the last 12 months have raised US$63bn, significantly more than the US$40bn raised by funds closed in the 12 months before that.
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- There are a record number of North America-focused private real estate funds in market as of Q1 2014, with 272 targeting a combined US$89bn, up from 256 targeting US$78bn as of Q4 2013, showing a strong interest in private real estate investment in the region.
- North America-focused private real estate funds are taking less time to reach a final close; funds closed inQ1 2014 spent an average of 15.4 months in market, compared to 18.8 months for North America-focused funds closed in 2013.
- The largest primarily North America-focused fund that held a final close in Q1 2014 was Pimco Bravo Fund II, managed by PIMCO, which held a final close on US$5.5bn and is targeting debt, distressed and opportunistic opportunities.
- Out of the 272 North America-focused private real estate funds currently in market, the largest proportion are following the higher risk value added and opportunistic strategies; there are 117 value added funds targeting US$35bn in capital commitments and 75 opportunistic funds targeting an aggregate US$23bn.
- Funds targeting opportunistic and value added opportunities in North America have the most capitalavailable to put to work (dry powder) as of March 2014 at US$41bn and US$27bn respectively.
Andrew Moylan, head of Real Assets Products, Preqin, said: "While there was a decline in fundraising for North America-focused funds in Q1 2014, compared with the last quarter of 2013, there have now been several consecutive quarters of strong fundraising, reflecting the growing institutional investor appetite for real estate funds. As a result of this increase in fundraising, private equity real estate fund managers now have an all-time high of $110bn available to invest in North America and with confidence in US real estate markets continuing to improve, these firms are likely to be very active in the coming months."
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By GlobalData
