Improving investor sentiment for European private real estate investment strategies has contributed significantly towards capital raising in the industry reaching pre-global financial crisis levels.
According to data from PERE’s Research & Analytics (R&A) division, $56 billion was raised for private real estate investment funds during the first half of the year. Further, historically more capital has been closed for private real estate funds in the second half of the year. Should the same transpire in 2014, then the total capital raised in the year would surpass the $117.2 billion raised in 2013.
Dan Gunner, director of research of Research & Analytics, said: “Private real estate fundraising has continued to perform very strongly in the first half of 2014 and we’re set for the best year for the asset class since the crisis.”
“Investors have been particularly keen to back managers in European real estate markets and also to put their money behind real estate debt strategies,” Gunner added.
Indeed, according to PERE R&A data, some $24.6 billion was raised for Europe by firms including Blackstone, which closed on $7 billion for its fourth opportunistic fund, Blackstone Real Estate Partners Europe IV, and Kildare Partners, which hauled $2 billion for its debut fund, Kildare European Partners.
Meanwhile in the debt space, $18.5 billion was raised, including Goldman Sachs Principal Investment Area’s $1.8 billion rebranded fund, Broad Street Real Estate Credit Partners II, which incidentally will include loans made to European deals within its mandate.
Of further note from the H1 numbers was the fact the capital raised was done by fewer managers than in recent years. Gunner commented: “Optimism should be cautioned since the trend of more investor money being managed by fewer managers continues. Only 101 funds made up this half-year total, suggesting the more established names are dominating.”
In 2013, $117.2 billion was raised by 265 funds and in 2012, 278 funds reflected $96.5 billion of equity. Both numbers were a far cry from the $161.5 billion raised by 301 funds in 2008, the year that Wall Street bank Lehman Brothers collapsed.
The average size of the funds raised so far this year stands at $556 million, 26 percent higher than in 2013, although in keeping with the trend of fewer managers raising greater funds, that number was distorted slightly by funds like the European vehicle of Blackstone or PIMCO’s second Bravo Fund, which collected $5.5 billion.
R&A counts all private real estate investment funds among its capital raising numbers, including core, core-plus, value-added, opportunistic and debt. The data comprises final closings only and excludes funds with only partial closes.