Multibillion-dollar funds have dominated the private real estate in 2019, with vehicles of $3 billion or more accounting for nearly half the capital closed in the first six months of this year.
While mega-funds proliferate, sub-billion-dollar closings are on track for a nine-year low. This is part of a greater trend of capital consolidation in the real estate fund space, with more money flowing to fewer managers.
Mega-funds provide scale and access to unique deals, allowing investors to write big checks and deploy more capital without having to add managers, a market-wide priority. While the benefits are apparent, it is less clear who gains more from swelling fund sizes – institutional capital or its managers.
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