Private Equity Real Estate Funds in Market in Q1 2011

by Andrew Herman

  • 18 Feb 2011
  • RE

There are currently 446 real estate funds in market seeking to raise an aggregate $146 billion. Since Q1 2010, the number of funds in market has increased by 80, while the aggregate target of funds on the road has decreased by $4 billion. The opportunities in debt and distressed real estate, as well as the emerging markets, have led to the establishment of a number of new funds focused on these areas. However, as real estate fund managers have grown more accustomed to the difficulty of attracting investor commitments, many firms have been forced to reduce their fundraising goals. This means that the average fund in market is targeting considerably less than in previous years.

The majority of real estate funds in market are primarily focused on property investments in North America. There are currently 241 North America-focused funds in market seeking to raise an aggregate $76.7 billion; accounting for 52% of the capital being targeted by all on the road. There are 115 Europe-focused funds in market seeking to raise an aggregate $41.1 billion, while 90 Asia and Rest of World funds are aiming to garner a combined $28.6 billion.

The two largest real estate funds in market are both managed by Lone Star and are each seeking to raise $4 billion. Lone Star Real Estate Fund II is an opportunistic vehicle, which targets investments in a broad range of investment assets in commercial real estate. Lone Star Fund VII invests in distressed residential mortgages and defaulting corporate bonds and loans in Japan, Western Europe and North America. Other notable real estate funds in market include Aberdeen European Shopping Property Fund and Blackstone Real Estate Special Situations Fund II which are seeking to raise €1.5 billion and $2 billion respectively.

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