Opportunistic Private Equity Real Estate Fundraising

by Sarah Unsworth

  • 28 Oct 2011
  • RE

There are currently 64 solely opportunistic private equity real estate funds in market, seeking to raise an aggregate $29 billion. 39 of these funds are focusing on investments in Asia and Rest of World and are targeting an aggregate $12.9 billion in commitments from investors. The two largest Asia and Rest of World-focused funds currently in market are the $1 billion ARA Asia Dragon Fund II and Forum Asian Realty Income III. ARA Asia Dragon Fund II invests in office, retail and residential properties located in Asia with a specific focus on China, Hong Kong, Malaysia and Singapore. Forum Asian Realty Income III invests in listed and private Asian real estate companies.

It should however be noted that due to current market conditions, many funds are incorporating debt, distressed or value added strategies alongside opportunistic investments. There are 121 funds currently raising that have a combination of these strategies. Of these funds, 87 are US-focused, 21 are Asia and Rest of World-focused, and 13 are Europe-focused.

The largest opportunistic fund currently on the road is the primarily US-focused Blackstone Real Estate Partners VII. The $10 billion fund has so far held one interim close, garnering $4 billion in commitments from investors. Blackstone Group also raised the largest opportunistic fund of the last five years: Blackstone Real Estate Partners VI closed on $10.9 billion in 2008.

There are a further 14 primarily US-focused vehicles solely targeting opportunistic investments currently in market, which are seeking aggregate commitments of $2 billion. The 10 European opportunistic funds currently raising are hoping to secure $4.3 billion. So far 33 of the 64 solely opportunistic funds in market have held at least one interim close, with 11 of these having two or more interim closes.

Since 2005, a total of 527 opportunistic funds have successfully closed, raising an aggregate $208.7 billion. Primarily US-focused funds have raised the most capital, with 127 funds accumulating $86.5 billion in commitments. Asia and Rest of World-focused funds have raised a similar amount, with 181 funds closing on an aggregate $83.8 billion. The 119 Europe-focused funds to close since 2005 raised $38.3 billion.

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