PERE records strongest Q1 fundraising since crisis

Fundraising for private equity real estate firms recorded its strongest first quarter results since the onset of the global financial crisis, with a handful of particularly large funds closed in the US and Europe, according to PERE’s Research and Analytics division.

In total, 58 property funds held final closes in Q1 2014, hauling a total of $30.5 billion globally. That compares to the $20.7 billion raised across 73 real estate funds in Q1 2013, and only $12.9 billion raised for 48 funds in Q1 2012.

European and global funds made up the vast majority of the capital raised for last quarter, collecting $14.6 billion and $7.8 billion, respectively. The fundraising for Europe was more than Europe-focused funds collected for all of 2010 combined, which was only $8.4 billion. North American funds were not far behind, securing a total of $6 billion of commitments. Indeed, 93 percent of all capital raised last quarter was allocated to funds with global, European and North American strategies.

Figures in these markets were skewed by a small number of particularly large funds, including the Blackstone Group’s €5.1 billion Blackstone Real Estate Partners Europe IV, which closed at the end of March, and Pacific Investment Management Co. (PIMCO)’s $5.5 billion global PIMCO BRAVO Fund II.

“As we have experienced over many recent quarters, investors are clearly putting their faith – and their cheques – with the most venerable names: Blackstone’s dominance comes as no surprise,” said Dan Gunner, director of Research and Analytics at PEI. “Our conversations with investors reveal a continued strong appetite for private real estate, although with almost 650 funds currently on the fundraising trail, there is considerable competition for their attention.”

Asia-Pacific was the one region that did not follow the upward trend. Asia-focused funds had their least successful fundraising quarter since Q1 2012. Compared to the $2.4 billion raised for 11 Asia-focused funds in Q1 of last year, last quarter 7 Asian funds collected only $1.7 billion. It was an even starker contrast to Asia’s fundraising success in Q4 2013, when 7 Asian funds raised $5.3 billion.