By looking at the average capital raised by the 10 largest private equity real estate fund managers as a percentage of their funds’ target sizes, we can gain a good indication of investor appetite for these firms.
In 2005, the top 10 firms raised 35% more capital than anticipated and in 2006, the top 10 firms exceeded their fundraising targets by 22%. Reflecting the buoyant fundraising environment, the firms exceeded fundraising targets by an average of 33% in 2007. While the top 10 firms exceeded their target by an average of 5% in 2008, the remainder of the private equity real estate universe struggled to secure commitments, with funds raised by these firms closing on an average of 81% of their targets. The aftershocks of the financial crisis were felt in 2009 and investors became very cautious; the top 10 firms raised an average of 59% of their targeted capital. However by 2010, the top 10 firms exceeded the targeted amounts by 5%, as such firms came to market with lower, more realistic fundraising targets that reflected the overall market.