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Fundraising by the 10 Largest Private Equity Real Estate Firms

by Farhaz Miah

  • 10 Jun 2011
  • RE

Recent analysis of the 10 largest private real estate fund managers, categorized by aggregate capital raised for closed-end real estate funds over the last 10 years, reveals that such firms account for high proportions of the total capital raised within the asset class. During 2000 and 2001, the top 10 firms raised funds accounting for a substantial 40% and 63% of all capital raised, respectively. This can be attributed to the closes of some large funds such as the $2.3bn Lone Star Fund III in 2000 and the $4.2bn Lone Star Fund IV in 2001.

Towards the middle of the decade, the extent to which the largest firms dominated fundraising declined in relative terms. In 2005, the top 10 firms accounted for 28% of the total capital raised as 19 funds raised $21.1bn. In 2006, the largest firms raised 10 funds and collected an aggregate $19.9bn, a significant proportion of which was contributed by Blackstone Group’s $5.3bn Blackstone Real Estate Partners V. 15 funds managed by the top 10 firms raised $35.2bn in 2007, led by Morgan Stanley Real Estate’s $8bn Morgan Stanley Real Estate Fund VI International.

The end of the decade represented a mix period for the largest real estate fund managers. For example, 2008 was a successful fundraising year for such firms, as 16 funds raised an aggregate $42.5bn. Blackstone Group’s $10.9bn Blackstone Real Estate Partners VI vehicle, which closed in Q1 2008, remains to date the largest ever private equity real estate fund, while the $7.5bn Lone Star Fund VI and the €2.2bn Carlyle Europe Real Estate Partners III also closed in the same year. By 2009 however, the impact of the financial crisis had hit the industry fully and consequently the top 10 firms accounted for only 17% of the aggregate capital raised in 2009, with closing large funds a difficult prospect in the challenging post-crisis fundraising environment. Only $8.4bn was raised by the top 10 firms, of which more than half was raised by a single fund, the €3.1bn Blackstone Real Estate Partners Europe III.

In the last year however, fundraising conditions have improved and in 2010, the top 10 firms managed to nearly double the amount of total capital raised the previous year, raising $16.4bn. Brookfield Asset Management’s $5.7bn Real Estate Turnaround Consortium and Morgan Stanley Real Estate’s $4.7bn Morgan Stanley Real Estate Fund VI Global closed in Q1 2010.

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