Real Estate Assets under Management and Dry Powder – February 2015

by Madeleine Stretton

  • 19 Feb 2015
  • RE

Assets under management (AUM) is defined by Preqin as the sum of unrealized value and dry powder (uncalled capital) of portfolio assets. The AUM of closed-end private equity real estate funds continued to grow during 2014, reaching $742bn as of June 2014. This is a $45bn increase on the total just six months earlier; completing a significant decade of growth for the industry, which managed assets of just $128bn in December 2004. 

The large increases in AUM are primarily due to an increase in unrealized value within the real estate space. Unrealized value has grown year-on-year since 2009, and has increased from $226bn to $567bn during this timeframe. In comparison, dry powder levels within the real estate space has remained relatively consistent, decreasing slightly from $186bn in December 2013 to $175bn in June 2014.

Broken down by geographic focus, we can see that US-focused AUM stood at $415bn as of June 2014, with Europe-focused and Asia-focused real estate AUM reaching $174bn and $116bn respectively, as of the same date. These are peak figures for both the US and Asia, while Europe-focused AUM has fallen from its peak of $193bn in March 2014.

On balance, the outlook for private equity real estate funds is positive, with continued upward movement for AUM and unrealized value, which is likely to make the real estate space a more attractive investment platform for institutional investors. 

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