Two-thirds of fund managers could disappear

Roughly two-thirds of all private equity real estate fund managers could disappear over the coming years amid industry consolidation in the wake of the credit crisis.

Veteran GPs speaking at the annual Association of Foreign Investors in Real Estate conference today said just 30 percent t 50 percent of fund managers could survive in future as LPs concentrated their capital on few funds.

During a panel at the Chicago conference, delegates heard there would be “very few survivors” in the future, with institutional investors unable and unwilling to commit the manpower and resources to “all these different bets” currently in market.

According to some estimates there are up to 785 private real estate funds in market trying to raise more than $250 billion in equity commitments.

At the AFIRE conference, several GPs told delegates the industry faced significant consolidation ahead.
“It tends to happen whenever you go through cycles in any industry,” said one opportunity fund manager.

“There’s going to be significant consolidation in investment management, in the financial institutions and probably in the public [real estate] companies too. It’s just the nature of what tends to happen when there’s distress like we are currently experiencing.”