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Residential Real Estate

by Sarah Unsworth

  • 12 Aug 2011
  • RE

There are 63 solely residential-focused private real estate funds currently in market, seeking to raise an aggregate $11.7bn. Of these funds, 21 have already held at least one interim close, raising an aggregate $2.1bn towards their targets. 45 of these funds are US-focused vehicles and they are seeking to raise $8.4bn, while five Europe-focused funds are seeking $1.1bn in commitments. There are 13 Asia and Rest of World-focused funds that are seeking to raise an aggregate $2.2 billion.

Selene Residential Mortgage Opportunity Fund II, managed by Selene Investment Partners and Related Real Estate Recovery Fund, managed by Related Companies are the largest residential-focused funds in market. Selene Residential Mortgage Opportunity Fund II is a debt and distressed fund that is seeking to raise $1bn, while Related Real Estate Recovery Fund has debt, distressed and opportunistic strategies and is seeking $750mn in commitments. Selene Residential Mortgage Opportunity Fund II purchases delinquent residential mortgages in order to recast and refinance whilst aiming to keep the borrower in the house. It focuses predominantly on the US; however it has the ability to invest globally if an investment opportunity arises.

From 2005 to August 2011, 200 residential-focused funds held final closes raising $32.2bn. In 2005, 44 residential focused funds closed, raising $6.6bn, dropping in 2006 to 38 funds, which raised $7.6bn, but increasing again in 2007 when 44 funds closed for a total of $7.6bn. There was a marked decrease in the number of funds holding final closes following the financial crisis in 2009, with just 20 residential-focused funds closing, having raised an aggregate $3.5mn. 2010 also saw similarly small numbers of funds holding final closes and in 2011 to date four residential-focused funds have held final closes, raising $1.2bn, indicating that the fund raising market for real estate funds has yet to fully recover.

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