2014 is on track to become the most successful year for private real estate fundraising since the global financial crisis, with fund managers collecting a total of $115 billion last year, according to the latest report from PERE Research and Analytics.
With another 15 percent of fund closes in 2014 likely to be disclosed over the next several weeks, last year’s total fundraising tally is expected to exceed that of 2013’s $118 billion.
Despite the higher aggregate capital raising numbers, fewer managers are raising funds overall, our latest data shows. In 2014, 222 funds held a final close, down from 285 in 2013. Meanwhile, a total of 760 property funds are currently in market, seeking an aggregate of $264 billion in commitments.
“Investor appetite for private real estate shows no signs of abating, said Dan Gunner, director of PERE’s research and analytics team. “2014 is almost certain to be the most successful year for private real estate fundraisers since the crisis as limited partners chase yield. Fund managers therefore have a record amount of capital to invest and so the impact on prices will be interesting to observe. From a fundraising standpoint, we expect 2015 to be another strong year”.
One notable fundraising trend in 2014 was the significant increase in the amount of fundraising targeting Europe. More than $40 billion was raised for new real estate investments in the region last year, up 81 percent from 2013. For example, US-based fund managers The Blackstone Group, Lone Star Funds and Starwood Capital Group all have been actively investing in Europe in the past year.
Private real estate secondaries also saw a strong year in capital commitments, attracting $3.6 billion in 2014 alone, compared with “negligible” totals in previous years. Additionally, real estate debt vehicles were popular with investors, hauling in a total of $29.2 billion last year, while value-added funds collected a similar amount, up from $21.2 billion in 2013.
The largest funds raised last year included The Blackstone Group's $8.57 billion Blackstone Real Estate Partners Europe; Lone Star Funds' $7.4 billion Lone Star Fund IX; PIMCO's $5.5 billion PIMCO BRAVO Fund II; Blackstone's $5 billion Blackstone Real Estate Partners Asia; and Wessal Capital's $3.22 billion Wessal Capital.