The average size of private real estate vehicles which held final closes in 2013 was US$511million, the highest ever recorded by Preqin.
This comes at a time when fundraising levels are at a five-year high, and investor sentiment towards the asset class is positive, but challenges still remain; far fewer funds were raised in 2013 compared to the
year before, funds are taking 19 months on average to reach a final close, and capital raised is being concentrated among fewer larger managers.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Private Real Estate Fundraising Key Facts:
- The average size of private real estate funds has reached US$511 million, the highest value ever, and significantly higher than the US$332 million average size in 2012.
- Although capital raised in 2013 has surpassed 2012 levels, the number of funds reaching a final close has fallen from 223 in 2012 to 162 in 2013, with capital increasingly concentrated among fewer managers.
- Higher risk/return profile strategies dominated the fundraising environment, with 46% of aggregate capital accounted for by opportunistic funds, with 54 funds raising US$35 billion in the year; additionally, 50 value added funds closed raising US$16 billion.
- Fundraising for first-time fund managers has become even more challenging, with only 7% of capital raised in 2013 accounted for by first-time funds; comparatively, 44% of capital raised in 2013 was accounted for by managers which have raised nine funds or more previously.
- The average time taken for a fund to reach a final close in 2013 was 19.0 months, only slightly lower than the average of 19.5 months for funds closed in 2012.
- Fund manager Lone Star Funds raised the two largest closed-end private real estate funds to close in the year, Lone Star Real Estate Fund III and Lone Star Fund VIII, which raised US$7 billion and US$5 billion in investor commitments respectively.
Private Real Estate Funds in Market Key Facts:
- As of January 2014, there are 451 closed-end private real estate funds in market targeting US$151 billion.
- 64% of the number of funds in market are primarily following either an opportunistic or value added strategy.
- The two largest funds in market are both managed by Blackstone Group: Blackstone Real Estate Partners
- Europe IV, targeting commitments of 5bn, and Blackstone Real Estate Partners Asia, targeting US$4 billion in investor capital.
- Over a quarter (27%) of capital targeted is by managers which have raised nine or more funds previously.
- 43% of funds in market have already been on the road for more than 18 months.
Andrew Moylan, head of Real Assets Products, Preqin, said: "The fundraising data for 2013 is encouraging for the private equity real estate industry, with the amount of capital raised by funds holding final closes reaching a five-year high, reflecting increased institutional investor appetite for the asset class. The number of funds holding a final close in 2013 was significantly lower than the number which closed in 2012 however, and there are signs that the largest fund managers are accounting for a growing proportion of the total capital being raised. With more than 450 funds on the road, the fundraising market remains extremely competitive and, despite increased investor appetite, it is clear that the firms which launch new funds in 2014 will have to work very hard to stand out from the crowd if they are to successfully raise capital."
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
