In the latest Preqin Special Report on the real estate industry, we investigated the fundraising environment of the Northeast US and found positive signs of an active market, reflective of the environment across the US real estate industry in general. Preqin’s Real Estate Online profiles over 550 real estate fund managers that are headquartered in the Northeast US, representing over a third of US-headquartered fund managers as a whole.
Preqin’s Performance Analyst tracks fund level performance data for 813 funds raised by US-based fund managers with vintage years between 1995 and 2012. Of these, 49% were raised by managers headquartered in the Northeast region. The chart above shows that the median net IRR by vintage year for Northeast US-headquartered fund managers generally follows the same trend of real estate funds managed by US-based fund managers as a whole. Funds raised by Northeast US-based managers with vintage years 1996, 2000 and 2003 produced a weaker performance than vehicles raised by US-based fund managers as a whole.
However, during the period 2005 to 2007, when the bursting of the US housing bubble caused real estate investments to experience large falls in their valuations, funds raised by Northeast US-based GPs outperformed those raised by US-based fund managers as a whole by 0.8% in 2005 and 1.5% in 2007. Since then, the real estate industry has recovered well and the net IRR levels for 2012 vintage funds are similar to those achieved by funds with pre-crisis vintage years; a positive result for investors seeking to diversify their portfolio in this asset class going forward.