RED 50 takeaways: This year’s ranking dares to be different

Another year of growth for the 50 biggest debt capital raisers belies the slowdown in wider real estate fundraising.

PERE’s latest ranking of the 50 largest fundraisers for real estate debt is a snapshot of a critical point in the market cycle.

As rates were repeatedly hiked in 2022 to curb inflation, banks tightened their lending requirements in response. This created problems for real estate managers in the form of both the cost and quantum of debt for refinancing and acquisitions. Meanwhile, investors grappled with the consequences of a ‘one-two punch’ on their portfolio allocations: high returns in 2021 followed by declining values in 2022.

Against this backdrop, private real estate as a whole was handed its worst fundraising total in five years. The RED 50, however, has largely bucked the trend.

1 The $2 billion club

This year’s top 50 real estate debt fundraisers have secured an aggregate $267 billion, up 19 percent on our 2022 ranking.

Despite the challenging conditions for real estate fundraising on the whole, James Jacobs, head of real estate for Lazard’s private capital advisory group, says he is seeing increased appetite for credit among institutional investors. “In a credit market where lenders have the potential to achieve higher returns due to a supply/demand imbalance, institutional investors are increasing their allocations to real estate debt,” he says.

Jacobs cites the stability of income, relative protection against rising rates and the potential cushion against valuation declines as the key factors that appeal to investors.

Further reflecting the maturation of the strategy, the threshold for inclusion in the big league has risen. Last year, the bottom 10 firms in the RED 50 had raised less than $2 billion each; in 2021, there were 14 such firms. This year, however, only the firm in 50th place has raised less than $2 billion.

Contrary to the concentration of capital that might be expected following a year of heightened macroeconomic volatility, the top 10 in this year’s ranking represent the exact same proportion of capital raised by the RED 50 as last year’s leaders did, at 44 percent. In addition, the bottom half of the table has recorded a larger net increase for 2022-23 compared with 2021-22, at $10.8 billion in additional capital versus $7.4 billion, respectively.

Jacobs says the restricted supply of credit in today’s market should see plenty of opportunities for this fresh capital to find a home. “Given the expected wave of refinancing, the potential funding gap could be substantial. As a result, the ability for alternative lenders to step in and provide credit at attractive rates, on rebased values with enhanced structural rights, is likely to continue.”

2 New blood

This year’s ranking contains eight names that are either new to the list or have returned after dropping out of the RED 50 last year. This compares with just one last year.

New York-headquartered Pretium Partners is the highest-ranked newcomer in the list, placing 15th. The residential specialist has raised $5.7 billion in real estate credit on a five-year basis. Jennifer Strickland, senior managing director and head of business development at Pretium, says investor appetite for residential assets is strong. “The significant build-up in borrower equity over the past several years due to real estate price appreciation, combined with the continued housing shortage, has created unique investment opportunities in mortgages and real estate.”

For those firms making a recurring appearance on the RED 50, net fundraising growth slowed for a fair proportion: 17 firms moved down the table to some degree versus last year’s list. But, on balance, 25 capital raisers either moved higher up the ranking or stayed in the same position.

Looking forward, Strickland thinks the “vacuum” created by the recent pullback from banks will benefit debt managers: “The regional bank crisis should unlock more opportunities for distressed investing and for non-bank mortgage lending as banks tighten their credit boxes.”

3 European retreat

An examination of the RED 50 by geography reveals stark variation in fortunes. Managers headquartered in Europe, where property values are falling the fastest on account of heightened macroeconomic stress caused by Russia’s war with Ukraine and the energy supply crisis, suffered a net decline in total debt fundraising. At $62.8 billion, their total is down 5 percent from last year. The number of European managers on the list also dropped from 15 to 11. By contrast, North American firms raised 27 percent more capital versus 2022’s ranking, and grew in number by three.


Total capital raised by the RED 50


Increase in capital from last year’s RED 50


Growth in capital from APAC-headquartered firms from last year


Decline in capital from Europe-headquartered firms

Jacobs thinks this could be primarily due to higher rate increases and higher returns in the US versus Europe, as well as currency volatility. “The majority of large institutional LPs’ allocations to real estate credit are USD denominated, and so they have a clear preference for USD exposure,” he explains.

Given the UK makes up a large proportion of Europe-wide credit fundraising, Jacobs also believes the political issues that sent shockwaves through the UK economy in the latter half of 2022 had a part to play. “Despite the attractive opportunity in real estate credit, it’s likely that the mini-budget and resultant sterling weakness have impacted European fundraising volumes.”

European managers in aggregate may have suffered a pullback, but the domination of the largest player in the real estate debt space remains unchallenged. Paris-based AXA IM Alts has added approximately $2.6 billion to its five-year total, and is almost $10 billion clear of its nearest rival.

The current debt funding gap presents “a tremendous opportunity for new debt capital,” says Justin Curlow, global head of research and strategy at the insurer-led asset manager. With bank lenders facing a bottleneck of maturing loans and assets secured at yesterday’s pricing, “that’s the opportunity for fresh capital to come in and dictate the terms a bit, and find a solution in that capital structure.”

4 Watch out for APAC

In direct contrast to the decline in Europe’s market share, the fundraising total for Asia-Pacific firms has jumped 45 percent on last year. Their share of total RED 50 fundraising has increased from 7 percent to 9 percent, with one additional firm joining the list. This newcomer is SBICAP Ventures, a Mumbai-based manager.

The firm behind the majority of APAC’s growth in this year’s list, however, is PAG. The Hong Kong-based manager has amassed $13.9 billion for real estate debt in a five-year period, representing a rise of more than $5 billion on last year’s total.

“Overall, we are seeing good and increasing interest,” says Anshumann Woodhull, partner and co-head of PAG Private Debt. “The recent banking problems and upcoming introduction of Basel IV will only increase the opportunity for non-bank lenders globally.”

Woodhull says APAC credit markets may be growing from a lower base relative to North America and Europe, but “there are some opportunities that are arguably able to generate better risk-reward than other regions.” n