2014 came to an end with $116 billion in aggregate capital raised by private real estate funds as markets continue to recover since the 2008 financial crisis. PERE Research & Analytics decided to take a look at the top 3 investing strategies raising the most capital, highlighting key geographic regions targeted and notable funds in each.
Opportunity private real estate funds raised $31.4 billion in 2014, making up 27% of aggregate capital raised. In terms of geography, 33% of this capital was allocated to Asia-Pacific, 32.7% to Pan-Europe, and 27.8% to North America. The three largest opportunity funds are all managed by the Blackstone Group, raising a combined $13 billion in capital or 11.2% of aggregate private real estate capital raised this year.
Debt was the second most popular strategy in 2014, raising $29.4 billion or 25.3% of aggregate capital. Global-focused funds took the lead, accounting for 50% of total capital raised within this strategy. This is due in large part to two mega-funds managed by US-based firms: Lone Star’s Fund IX, closing at $7.4 billion, and Pacific Investment Management Company (PIMCO)’s Bravo Fund II, closing at $5.5 billion.
Tied with Debt for second most popular strategy, Value Added also raised $29.4 billion or 25.3% of aggregate capital in 2014. Funds targeting North America made up 52.6% of total Value Added capital raised, 7 of which closed with more than $800 million in commitments each. Europe-focused funds made up 27.2% and funds targeting the Middle-East/Africa region made up 10%, the latter figure largely due to Wessel Capital’s € 2.5 billion fund.
All other fund strategies, which include Fund of Funds, Co-Investments, and Secondaries, saw major gains in terms of fundraising during 2014. Fund of Funds and Co-Investments raised a combined $8.5 billion and funds targeting the Secondaries market raised $3.6 billion. Much of the success for the latter strategy can be attributed to Partners Group’s $1.95 billion Real Estate Secondary 2013 fund, which alone represents 16% of the capital within this category.