As of February 2012, there are 183 private equity real estate fund managers that are headquartered in New York. These firms have closed 274 private real estate funds, raising an aggregate $198bn in the past 10 years. The years between 2004 and 2008 saw the highest fundraising levels for New York-based managers, with fundraising peaking in 2008, when 44 funds garnered total commitments of $45.4bn. In 2004, 28 funds attracted $11.9bn in capital, with this jumping up to $19.8bn raised by 29 funds in 2005. Forty two funds closed in 2006 raised $32.2bn, while 44 funds closed in 2007 securing $41.3bn in commitments.
The financial crisis significantly impacted private equity real estate fundraising globally in 2009, with New York-head quartered firms experiencing a severe contraction in the total amount of capital they have been able to raise. The difficult fundraising environment resulted in $16.5bn being raised by 24 funds in 2009 and this decline in fundraising continued throughout 2010, with just 14 funds reaching final close securing $11bn in commitments. Fundraising levels for New York-based firms remained stagnant in 2011, with $8.4bn of commitments garnered by 15 funds. In 2012 to date, Related Real Estate Recovery Fund is the sole fund to have closed, attracting a total of $825mn from investors.
Blackstone Group has been the most successful New York-based firm in terms of fundraising in the past 10 years, having raised an aggregate $30.1bn for its private equity real estate funds over this period. The firm has also managed to raise the largest ever private equity real estate fund, Blackstone Real Estate Partners VI, which closed on $10.9bn in Q1 2008. Morgan Stanley Real Estate has secured $20.6bn of private equity real estate commitments in the past 10 years, with the major contribution coming from its $8bn final close of the opportunistic Morgan Stanley Real Estate Fund VI International in Q2 2007. Another major New York-based private real estate firm is Fortress Investment Group, which has raised a total of $19.9bn in private equity real estate commitments in the past decade, with the opportunistic Fortress Investment Fund V managing to attract $5bn of institutional capital in Q3 2007.
How is the fundraising situation at present? There are currently 57 private real estate funds in market being raised by New York-based firms, seeking $37.9bn in commitments. Blackstone Real Estate Partners VII, launched in Q2 2011, is the largest vehicle currently in market. The opportunistic North America-focused fund, which has already achieved a third close towards the end of Q4 2011 having raised over $6bn, focuses on acquiring high quality assets by taking large, complicated situations where competition is limited and its ability to move quickly is an advantage. The fund aims to acquire distressed and/or undermanaged properties at below market prices, execute a strategy to fix the issues, and thereby create assets that can be sold to core real estate owners at higher values.