The new world order

The results of PERE’s annual fundraising ranking are in, and the elimination of the last remaining funds raised prior to the fall of Lehman has resulted in a complete makeover of the list

Over the past two years, the PERE 50 has experienced the most dramatic makeover of its composition in the history of the ranking. Much of this is due to the elimination of all funds raised prior to the fall of Lehman Brothers and the start of the global financial crisis, as those investment vehicles now fall outside the ranking’s five-year fundraising window. However, the makeover also is due to the new realities of fundraising in a post-crisis world, including new regulations and restrictions, consolidation among fund managers, reduced investor interest in blind-pool structures and smaller fund sizes on average.

Among the casualties of this new world order are the real estate investment arms of investment banks Morgan Stanley and Goldman Sachs, both of which have completely fallen out of the ranking’s top 50 firms. Indeed, Morgan Stanley has not closed on any significant equity since its seventh global opportunity fund, which closed in 2008, while Goldman has shifted its strategy to focus primarily on debt vehicles, which are not counted towards this ranking.

Other long-time industry stalwarts that have dropped out of the top 50 completely include AEW Global, Invesco Real Estate, Rockwood Capital and Lubert-Adler Partners. Shorenstein Properties also dropped out of the top 50, but at least that firm is in market with a sizable new fund, which should see it return to the middle of the pack next year.

The disappearance of these veteran organizations from the PERE 50 has allowed a number of newer firms to make their ranking debut over the past two years. In fact, there are 14 firms making their PERE 50 premiere this year, including such notable first-timers as Global Logistic Properties, Secured Capital, Gaw Capital Partners, Patron Capital and Related Companies. Those additions come on top of 15 new firms in last year’s ranking, nine of which remain in the top 50 this year. In other words, nearly half of the firms in the PERE 50 this year have joined the ranking over the past two years.

Meanwhile, despite reduced investor interest in traditional funds and smaller fund sizes on average, several firms did find success with sizable new vehicles over the past five quarters. Oaktree Capital Management closed its latest opportunity fund on $2.68 billion, which propelled the firm some 12 spots in the ranking. Orion Capital Managers moved up 16 spots on the strength of €1.3 billion in equity raised for its fourth European fund, while Cerberus Capital Management jumped 21 places in the ranking on the back of $1.4 billion for its latest opportunity fund.  Last but not least, GI Partners leapfrogged 26 spots – the biggest jump in the ranking this year – due to early fundraising success for its fourth fund, which had raised $1.66 billion as of press time.

Topping the PERE 50 ranking once again is The Blackstone Group, which far and away has been the biggest capital-raiser over the past five years. Its success this past year is thanks to a record $15.8 billion in new real estate capital raised in 2013, much of it coming from its new Asia- and Europe-focused funds. Since the global financial crisis, the firm has raised a total just north of $32 billion, which is nearly as much as the next four firms combined.

These are just a few of the highlights of this year’s ranking, which is available to view online now. For the complete PERE 50 ranking, along with brief profiles on the included firms, click here