Real estate fund managers corralled just $30.4 billion of commitments for value-added and opportunistic property vehicles in 2009 – less than a third of the peaks witnessed in 2007.
Data from PERE magazine reveals 57 commingled real estate vehicles held closes last year, with European-focused funds leading the charge.
Of the total amount of capital raised in 2009, 35 percent was invested in Europe-focused funds, compared to 26 percent deployed to vehicles targeting the Americas and 17 percent focused on Asia. Among the European funds that closed in 2009 were The Blackstone Group’s €3.1 billion Blackstone Real Estate Partners Europe III and Orion Capital Management’s €1.28 billion Orion Europe Real Estate Fund III. Global strategies attracted 22 percent of all capital commitments.
The figures however are significantly off the peak of 2007, when $85.2 billion was raised for value-added and opportunistic strategies. Last year’s fundraising total even failed to top 2005 levels – when PERE first started collecting data – when $37.4 billion was raised by GPs.
In the wake of the credit crisis, large numbers of institutional and individual investors held back from making new commitments to the asset class as they sought to evaluate existing investments.
According to a report from placement agent CP Eaton this week, European real estate limited partners pushed 2009 allocations into 2010 owing to concern over the “global macroeconomic picture and capital adequacy ratios”, while in the US only the highest quality, legacy-free fund sponsors – with a “demonstrated track record of distressed performance and/or those niche oriented operators” – are able to raise equity commitments.
More than 200 private equity real estate funds are currently raising capital globally, according to the proprietary PERE data, which does not track core, core-plus or debt vehicles. Sources add there are roughly 90 real estate debt vehicles currently in market seeking capital in the US.