Preqin’s Real Estate Online service shows there are currently 454 closed-end private real estate funds in market, looking to garner $160bn in aggregate capital commitments. The geographic focus of these funds is heavily weighted towards North America, with 60% of funds in market targeting this region, and 51% of the total capital sought worldwide looking to invest in the region.
The 273 vehicles focused on North America are looking to raise $81bn in capital commitments. One hundred Europe-focused funds are targeting $51bn (32% of the global target sought), while 49 Asia-focused vehicles are seeking $21bn in aggregate capital, equivalent to 13% of the global equity target. The remaining 4% of capital is being sought by funds focused on regions outside North America, Europe and Asia, with $7bn targeted by 32 funds.
Value added strategies are the most prevalent among funds on the road, though opportunistic funds are looking for the most capital; 164 value added funds are hoping to raise $49bn in aggregate capital, while opportunistic strategies are utilized by 138 funds in market, seeking $51bn in equity. Real estate debt strategies are employed by 59 vehicles targeting $25bn in capital commitments, followed by 38 core-plus funds looking to garner $13bn. Core strategies are more prevalent in terms of the number of closed-end funds in market than distressed funds, with 32 and 23 on the road respectively. However, distressed strategies are looking to raise slightly more capital, $11bn as opposed to $10bn by core funds.
Distressed funds have the largest average target size of $582mn, followed by real estate debt funds targeting $439mn. Opportunistic funds have an average target size of $386mn while core-plus vehicles target $362mn on average. Core funds target $316mn in equity, slightly more than the average value added fund target of $309mn.
Of all the funds currently raising, almost a quarter have already spent more than two years in market. A third of funds that have yet to hold an interim close have spent less than six months in market, while 35% of funds that have at least held one interim close have spent over two years on the road.
Lone Star Fund IX is the largest fund currently on the road, targeting $7bn. The fund will focus on non-performing and sub-performing single-family residential real estate debt on a global basis. It has raised $5.3bn to date through a single interim close which took place in April. The second largest fund is Starwood Global Opportunity Fund X, which has a target equity raise of $4.5bn and will target a diversified range of property sectors.