Global private equity real estate fundraising increased slightly for funds closed in Q1 2010 compared to funds closed in Q4 2009, with nearly $10 billion in aggregate commitments raised by funds closing in the period. However, quarterly fundraising remains at a much lower level than prior to the economic downturn; in excess of $40 billion was raised by private equity real estate funds closing in each of the second and third quarters of 2008, before the crisis began to have an effect on fundraising in Q4 2008.
The largest fund to close in Q1 2010 was Morgan Stanley Real Estate Fund VII Global. The vehicle, which attracted total commitments of $5.2 billion from investors, will make opportunistic, distressed asset and distressed debt investments. Around half of its investments will be made outside of Europe and North America. The aggregate fundraising target of private equity real estate funds currently seeking capital from investors continued to fall over the course of Q1 2010. The aggregate target fell from $173 billion to $147 billion, as some funds lowered their targets in light of the difficulties encountered in attempting to garner commitments from investors that remain cautious. Investor caution is also highlighted by the increase in the length of time it is taking private equity real estate funds to reach a final close, which is now up to 18.8 months for funds closed so far in 2010, having increased more than 40%, to 18.2 months, in 2009 compared to the previous year.
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