Despite a paltry fourth quarter, private real estate fundraising ended 2019 on par with the prior three years.
Managers entered the last three months of the year having closed nearly $121 billion, putting it on a near-record-setting pace, according to PERE’s 2019 fundraising data. With just $14.5 billion finalized in the fourth quarter, though, the industry finished the year with $135.3 billion, which was in line with the $137.5 billion, $139.8 billion and $131.5 billion closed in 2016, 2017 and 2018, respectively.
However, while the total capital in the market remained consistent, 2019 marked the fifth year in a row that the total number of closings declined year over year. With just 181 vehicles completing their fundraising efforts, last year saw the fewest closing since PERE began tracking the space more than a decade ago.
The last time private real estate ended a year with such lackluster fundraising was 2009, when managers brought in just $14.6 billion in the fourth quarter. The disappointing finish to 2019 caps a year otherwise defined by large funds, with an average closing of $747 million, up from $539 million last year and $382 million five years prior.
The top 10 funds accounted for 43 percent of the capital in the market, led by New York-based Blackstone‘s Real Estate Partners IX, which combined institutional and retail capital to achieved a record-setting close of $20.5 billion, followed by Toronto-based Brookfield’s Brookfield Strategic Real Estate Partners III at $15 billion. Lone Star Funds wrapped up nearly $13 billion of fundraising between two vehicles and the next seven managers closed on $2 billion or more.
Last year also saw more capital flow to sector-agnostic vehicles, which accounted for 71 percent of the market, up from 64 percent the two years prior and 59 percent in 2014. Among sector-specific funds, multifamily and residential have emerged as the property types of choice, attracting 43 percent of closed capital between 2017 and 2019, up from 30 percent of funds between 2015 and 2016.
From the onset, 2020 is poised to be another strong year for mega funds, with 10 vehicles in the market targeting $2.5 billion or more. One of those vehicles, Blackstone’s Blackstone Real Estate Partners Europe VI, had received €8.75 billion of commitments as of January 1 against a €10 billion target.
To learn more about these and other trends, watch out for our full fundraising report, to be published later this month.
Editor’s note: This story has been updated to reflect to the inclusion of Blackstone Real Estate Partners IX as part of 2019 in our latest fundraising tabulation. BREP IX closed on $2.2 billion of retail capital in September 2019. Previously, the fund was counted as part of 2018 because it achieved its institutional close that December.