Since the covid-19 pandemic has enveloped much of the financial world, growing institutional appetite, and provision, for lower-risk fixed income has seen all viable proxies benefit. Private real estate credit strategies are riding this wave, evidenced by PERE’s signature Real Estate Debt 50 manager ranking.

This year’s top 50 debt fund managers have collected an aggregate of $224 billion, up more than 18 percent on 2021. Last year’s ranking was 20 percent higher than 2020. This is a capital market space with tangible momentum.

It is also a space subject to notable dynamic changes. PERE found the fundraising growth was dispersing further afield from a prior concentration of activity in New York. We also witnessed how private equity businesses were making notable headway relative to other kinds of real estate credit fundraising organizations.

1. Understanding leads to scale

Managers attribute the main cause of the RED 50’s exponential growth to an increasingly better understood asset class. “For many years, people didn’t know where to put real estate credit,” says Jeffrey Fine, global head of real estate client solutions and capital markets within Goldman Sachs Asset Management, which ranked 10th in this year’s ranking. “I think that has become clearer. With that, comes greater deployment.”

As institutions have become more familiar with real estate debt, they have shifted from looking at private credit funds as mainly suitable for the higher risk and return bridge or mezzanine financing market to also being appropriate for stable, lower returning debt plays too. “The risk-adjusted returns in real estate debt can make a lot of sense for institutional portfolios. In many cases now, it is core equity-like,” says Richard Mack, chief executive and co-founder of Mack Real Estate Credit Strategies, the New York-based manager which came in 25th place this year.

Jonathan Pollack, global head of structured finance at Blackstone, which ranked third this year, adds: “You have a broad acceptance of our industry as a legitimate institutional presence in the lending markets, as well as of this product area among institutional investors. Those two things have been building organically.”

Goldman Sachs’ Fine also believes fundraising has quickened pace in tandem with compressed asset holding periods by borrowers. “There has been a tremendous amount of asset inflation in tight windows and that has led to record loan turnover,” he says. “This has led to more and faster fundraising.”

2. A less Big Apple

A geographic dispersing among the biggest raisers of capital for credit strategies is another key takeaway. In 2021, New York dominated, hosting nine of the top 20 managers. Fast forward 12 months, that number has dropped to just five. While the presence of London and Los Angeles was consistent, other US locations featured higher up the ranking this year, such as Nashville, Boston and Salt Lake City.


Total capital collected by the 2022 RED 50


Increase from last year’s RED 50


Number of top 20 managers based in New York, down from 9 in 2021


Number of spots Brookfield, the biggest riser in the top 10, jumped up the list since 2021

“Especially as it relates to the US, economic growth has occurred away from coastal markets,” Mack says. This is not a phenomenon specific to real estate, but a broader theme. Nonetheless, “certainly, transitional property lending has gone to where the growth is,” adds Mack, who says his firm’s equity business is following today’s changing working patterns by investing in American growth markets, many of which are inland. “It doesn’t mean the aggregation of capital should be occurring away from gateway markets. But it could be a factor.”

Fine agrees. He says the adage of people going to where jobs are is reversing. “Jobs are following where people want to be. Other cities are becoming viable financial centers as people have greater choices,” he says. “We are big believers in New York. But we do see more alternative managers choosing to locate elsewhere.”

3. Private equity challengers

Paris-based insurance platform, AXA Investment Managers – Real Assets, leads the list for the third consecutive year, this time to a greater extent than before. Its lead over second place PGIM Real Estate, another insurance platform, was $12.8 billion, a 49 percent greater gap than the $8.6 billion lead held over second-place Blackstone in 2021.

But while insurers topped the ranking, the standout risers came from the private equity sector. Among them was Brookfield Asset Management, which rose 17 places to fifth, Berkshire Residential Investments, up 12 places to ninth, and Kayne Anderson Capital Advisors, up 14 places to 12th.

Mack credits these spurts to a current consolidation trend in private markets, where institutional investors are committing more capital to top managers that command operational scale. “Investors want to reduce friction. They understand there’s a market opportunity in real estate credit, they have relationships and want to extend those into real estate credit,” he says.

Fine also sees consolidation making a difference: “As investors aim to reduce their numbers of managers, those they do back are, holistically, providing them with differentiated solutions. With real estate credit becoming an increasingly more important component of many investors’ real estate portfolios, larger and more resourced managers should disproportionately benefit over time.”

Pollack argues that, ultimately, the rise of private equity firms is down to institutional comfort with the widening array of debt vehicles they offer. Blackstone, for instance, nowadays also manages insurance money and that means it can offer credit strategies with lower returns than it sought before. “Seven to eight years ago when I started at Blackstone, these types of investments were appealing to a narrow subset of investors,” he says. “That has broadened dramatically since, as rates have stayed persistently low. Looking for the range of returns offered in real estate credit has become more broadly thematic among institutional investors.”