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Private Real Estate Funds: An Analysis of Time Spent on the Road – October 2015

by Abbie Smith

  • 08 Oct 2015
  • RE

Fundraising for private real estate funds has remained a long process for many fund managers in recent years. Preqin’s Real Estate Online details 81 vehicles that have held a final close in 2015 so far, spending an average of 19 months on the road, the same as 2014 and similar to 2012, when funds spent an average of 18 months in market. Despite the average time taken for private real estate funds to reach a final close remaining largely unchanged, the aggregate capital raised by these vehicles has increased year-on-year.

Although more capital is being raised by private real estate funds, the chart above illustrates that it is taking longer for vehicles to reach a final close. Thirty-two percent of private real estate funds that have held a final close in 2015 so far have spent over two years on the road, an increase of 11 percentage points from 2012. The slowing momentum of the private real estate fundraising environment is reflected in the average time it has taken funds to reach a first interim close. In 2012, it took an average of 3.3 months for vehicles to reach a first close, growing to an average of 5.4 months in 2015 to date. Fund managers should be prepared to spend longer on the road marketing their vehicles if they want to have a successful fundraise.

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