In fundraising, it can often feel like you take two steps forward only to be thrust one step back by events outside of your control.
A collapse in equity valuations means an LP you’ve been courting for six months is suddenly over-allocated to real estate and now can’t commit that $50 million to your fund. A placement scandal at one pension fund escalates to consume the entire placement agent business and you’re left chasing down LP commitments on your own, without the invaluable help of a third party.
If there was any year in which fundraising took a big step back, 2009 was it. According to PERE data, new fund commitments dropped back to below 2005-levels. However, despite the dollar drought, there were still signs of life in 2009. Some funds, including a handful of multi-billion dollar and euro vehicles, held final closes after fostering new relationships with new LPs that both sides expect to flourish in the future.
It is in tribute to these rare achievements that PERE has created the board game Capital Pursuits! so real estate investment professionals globally can enjoy the highs and lows of fundraising PERE-style. Grab your colleagues, and some pennies for markers, and see how a roll of the die can force you to retreat to the wilderness when your existing LPs vote to wind down your fund following a founding partner split, or catapult you into the lap of Australian superannuation funds with cash to deploy. If only it were so easy on the road.
In real life, of course, once you have secured your LP capital, you also have to ensure you use it wisely. Take it from Daniel Neidich, the founder of Dune Real Estate Partners and founder and former head of Goldman Sachs’ legendary Whitehall funds. Sometimes nicknamed the godfather of the real estate opportunity fund business, Neidich has more than 30 years of experience in real estate investing. His philosophy boils down to three key principles: know when you want to make your money, never follow the pack, and focus on the unique. Like Dune’s investment in New York’s Standard Hotel, Neidich is by no means your standard real estate investor. Our interview with him starts on p. 22, so get reading.
And then get out there, and play the game.
Enjoy the issue,
Senior Editor, Real Estate