When it comes to private real estate fundraising, 2015 has been a strong year for surpassing original targets. According to data from PERE Research & Analytics (R&A), 34 percent of private real estate funds closed at above target so far this year, while 48 percent were at target and 18 percent were below target. The biggest shift in the past year comes from more funds exceeding their equity goals versus simply meeting those targets: in 2014, 21 percent of funds surpassed their goals, while 60 percent closed at target and 19 closed below, the data said.
Indeed, the fundraising numbers for 2015 appear to be a near reversal of statistics from 2008, when just 13 percent of private real estate funds beat their targets, 42 percent reached their targets and 45 percent fell short. In fact, the percentage of funds exceeding their equity goals is at its highest level since the global financial crisis, while the percentage of funds missing their goals is at its lowest.
In 2015 to date, the five private real estate funds that surpassed targets by the highest amount included The Blackstone Group’s Blackstone Real Estate Partners VIII, for which the firm had aimed to raise $13 billion but ultimately raked in $15.8 billion. KSL Capital Partners’ KSL Capital Partners IV, also went far above target, with a final close of $2.67 billion against a target size of $1.5 billion, while Starwood Capital Group’s Starwood Distressed Opportunity Fund X gathered $5.58 billion against a $4.5 billion target. Other overachievers were Lone Star Funds’ Lone Star Real Estate Fund IV and Global Logistic Properties’ China Logistics Fund II, which beat their goals by $900 million and $700 million, respectively.
Meanwhile, among the five property vehicles that had missed their targets by the widest margin were Morgan Stanley Real Estate Investing’s North Haven Real Estate Fund VIII, which collected $1.7 billion, slightly over half of its $3 billion equity goal; Legal & General Property’s UK Property Income Fund II, which attracted $362.33 million, less than a third of its $1.52 billion target. Others that fell well below target were Renshaw Bay’s Renshaw Bay Real Estate Finance Fund, which raised $539.4 million against a $758 million target; Savanna Investment Management, which gathered $440 million of its $650 million goal; and CarVal Investors’ CarVal Investors Europe Real Estate Partners, which amassed $360.56 million of a $558.14 million target.
Interestingly, the amount that a fund exceeded or fell short of its target also roughly corresponded with its time in market. All five of the funds that significantly beat their targets were launched a year or less before their final close, according to PERE R&A. Meanwhile, all five of the funds that were dramatically below target were in market for at least two years before reaching a final close. In fact, the CarVal fund closed approximately four years after its launch, the data said.