Since Q1 2013, a total of 187 vehicles managed by US-based fund managers have held a final close, attracting an aggregate $88.5bn from investors. Q4 2013 saw the highest amount of capital raised for US-based fund managers since Q1 2013, with 30 funds raising a total of $20.3bn during this period. Q2 2013 was the peak in terms of the number of funds closed, with 47 funds closed raising an aggregate $18.6bn. Since this period, however, the number of funds closed has fallen by 49%, with just 24 funds closed in Q2 2014. In terms of capital raised however, H1 2014 has been more successful for US-based firms than H1 2013, with an increase in capital of 26% from the $24bn raised in H1 2013, despite just $11bn being raised by US-based managers in Q2 2014.
US-based private real estate fund managers appear to have a relatively high risk appetite, with 85% of all real estate private equity vehicles closed in H1 2014 utilizing a value added (54%) or opportunistic strategy (31%). Real estate debt was the next most commonly-utilized strategy by these firms (6%), with distressed and core-plus vehicles each representing 4% of funds closed. Opportunistic strategies attracted the most capital from US-based managers, raising $11.4bn from investors in H1 2014, although approximately 60% of the capital raised came from the closure of Blackstone Real Estate Partners Europe IV, which attracted €5.1bn (or $7.1bn) in investor capital. Debt funds raised the same amount of capital as value added funds ($8.3bn), with core-plus and distressed funds representing 7% of the capital raised by US-based managers.
The overwhelming majority of private real estate funds raised by US-based managers focus on domestic investments, with 92% of funds closed in H1 2014 choosing to invest in North America, representing 71% ($21.5bn) of the committed capital. Four percent of funds closed in H1 2014 by US-based managers targeted property investments in Europe, raising a total of $8.1bn, and 4% of funds focus on Asian investments and properties outside of North America, Europe and Asia, with these funds garnering $600mn.
The largest real estate funds closed by US-based firms in H1 2014 include the record close of Blackstone Real Estate Partners Europe IV, which targets opportunistic investments throughout Europe. Broad Street Real Estate Credit Partners II, managed by Goldman Sachs Merchant Banking Division, attracted $1.8bn in investor capital, and targets commercial real estate-backed loans for office, hotel and retail properties in the US and Europe. Additionally, Walton Street Real Estate Fund VII closed at $1.4bn to invest in a diverse range of opportunistic and value added US properties.