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Private Equity Real Estate Fundraising by US-focused Managers

by Andrew Herman

  • 15 Apr 2011
  • RE

The period of 2004 – 2010 represented a time of significant growth for US-focused private real estate fundraising. In 2004, 78 real estate funds reached final closes raising an aggregate $21.2 billion. Fundraising levels continued to rise in 2005 and 2006, with $30.6 billion and $50.0 billion being raised in these years respectively. In 2007, a record 125 US-focused real estate funds reached final closes, garnering an aggregate $49.7 billion. 2008 was the most successful year ever in terms of capital raised by US-focused real estate funds; 117 vehicles closed raising an aggregate $58.0 billion in equity. The economic downturn led to a decline in fundraising in 2009, when $24.2 billion was gathered by 71 funds, and fundraising decreased further in 2010, with 42 funds closed raising an aggregate $12.4 billion. This accounted for under a quarter of the total capital raised during 2008.

Presently, there are 229 primarily US-focused private real estate funds on the road, seeking to raise an aggregate $63.1 billion. The average US-focused fund in market is seeking to garner $275 million in capital commitments and 96% of the capital being sought by these vehicles is by managers located domestically. New York is the state where the most managers with funds currently in market are based. There are 50 funds currently being raised by firms based in New York, with these vehicles seeking to garner an aggregate $19.5 billion. Approximately $11 billion is being targeted by 40 funds managed by firms located in California, whereas managers located in Texas, Illinois and Washington D.C, are aiming to raise  $7.1 billion, $4.2 billion and $3.1 billion respectively. There are four US-focused funds on the road managed by Canadian managers, which are aiming to raise an aggregate $1.1 billion, while four US-focused funds managed by UK-based firms are also targeting $1.1 billion.

The two largest primarily US-focused private real estate funds ever raised were both managed by Blackstone Group. The firm raised $10.9 billion for Blackstone Real Estate Partners VI, which is an opportunistic vehicle which acquires institutional assets with flaws. Its predecessor Blackstone Real Estate Partners V raised $5.25 billion and reached its final close in 2006. Other notable US-focused funds include Beacon Capital Strategic Partners V and Fortress Investment Fund IV, which raised $4 billion and $3 billion respectively.

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