Sector-Specific Fundraising: H1 2014

While private real estate funds typically choose a diverse approach when it comes to which property types to invest into, some funds choose a single property type to devote capital towards. Data from PERE Research & Analytics has revealed that a total of $12.5 billion had been raised between 41 sector-specific funds in H1 2014. These funds make up 41 percent of the funds closed in H1 2014, however, they only account for 22 percent of capital raised.

As indicated in the above graph, multi-family/residential funds make up the majority of sector-specific fundraising for H1 2014 at 48 percent, or about $6 billion. This represents a 115 percent growth from the end of H2 2013, where a total of $2.8 billion was raised. Additionally, these funds make up roughly half of the sector-specific funds that closed for the half. The most notable multi-family/residential fund to close in H1 2014 was the debt-related Kildare European Partners I, managed by Kildare Partners, which closed on $2 billion.

Industrial funds came in second as the most favoured property type for H1 2014, accounting for 27 percent of total capital raised. Typically, in sector-specific fundraising, these funds almost always make up the majority, with industrial funds representing 42 percent of capital raised in H2 2013 and 40 percent in H1 2013. This dip is in large part due to a lack of $1billion-plus fund closings in H1 2014 as opposed to H2 2013, with one fund closing at/above $1 billion in H1 2014 compared to the four in H2 2013.

Office fundraising comes in third in capital raised, making up 13 percent of sector-specific fundraising or about $2.3 billion. This is a 144 percent growth from the prior half where just under $1billion had been raised, which also accounted for 7% of the capital raised in H2 2013. For H1 2014, fundraising for the sector had all been raised in Q2 2014, with the largest fund being a joint venture launched between AXA Belgium and ATP at €475 million to invest in core office space in Brussels, Belgium.

Notable sector-specific funds in market include the Rose Rock Partners Fund, managed by Rose Rock Capital Limited, which is targeting $2 billion to invest in office properties and the core-plus ING REIM European Shopping Centre Fund, managed by CBRE Group, with a target of €750 million.