Industrial-Focused Private Real Estate: The Current Fundraising Landscape – October 2015

by Philip Wedge

  • 28 Oct 2015
  • RE

Preqin’s Real Estate Online database contains detailed information on 60 industrial-focused private real estate funds that have reached a final close since 2011, collectively raising an aggregate $24bn in capital commitments. Fundraising in 2011 was particularly low for real estate funds with a primary focus on industrial properties; 10 vehicles reached a final close raising $1.6bn. However, since 2011, this property type has experienced significant year-on-year growth in both the number of vehicles closed and aggregate capital raised. 2015 has already surpassed the $6.6bn raised in 2014, despite approximately half the number of funds closing. This is in part due to the success of some large vehicles reaching a final close this year; two of Global Logistic Properties’ vehicles, CLF Fund II and GLP US Income Partners I, raised $3.7bn and $3.2bn respectively, together representing more capital than was raised in the whole of 2014. This mirrors a trend seen across the private real estate industry where the largest, most experienced fund managers are contributing larger proportions of capital to the industry total.

North America and Asia dominate the fundraising market for industrial-focused private real estate funds closed in 2011-2015. Vehicles focused on opportunities in North America raised a total of $9.1bn through 20 funds, while managers targeting Asia closed 21 funds for an aggregate $8.8bn. Europe-focused vehicles account for only 11% of total industrial-focused fundraising in the period, while Latin America- and Australasia-focused funds account for 10% and 4% respectively of capital raised in the past five years.

In terms of primary strategies employed by vehicles, the industrial private real estate fund market is weighted more towards value added and opportunistic vehicles, with 33% and 25% of funds closed in the last five years respectively adopting these strategies. These two strategy types have collectively raised 58% of the total capital for the sector in this time period. Core and core-plus funds have accounted for 40% of funds closed in the last five years and 42% of capital raised in the same period.

Preqin’s Real Estate Online also tracks 14 industrial-focused private real estate funds currently in market, which are seeking $3.3bn in investor capital. Of the 14 funds in market, seven are targeting North American industrial properties, three are looking to invest in Asia and the remaining four are focusing on European and Australasian industrial property markets. Half of these industrial-focused funds in market are pursuing value added strategies; three are core vehicles and the remaining four funds will be implementing core-plus strategies.

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