The Rise in Prominence of Large Private Real Estate Funds in Market – November 2015

by Abbie Smith

  • 06 Nov 2015
  • RE

Preqin’s Real Estate Online service currently profiles 31 real estate funds in market with a target size of $1bn or more, collectively targeting $52bn in investor capital. Eighty percent of these vehicles currently raising capital target high-risk strategies (value added, opportunistic, debt and distressed) in well-established property markets. More specifically, 52% of funds are primarily North America-focused, followed by Europe- (32%) and Asia-focused funds (16%). No funds in market are targeting property markets outside these three regions.

The number of closed-end private real estate funds targeting $1bn or more has more than trebled over recent years; in October 2012 there were only eight vehicles in market, collectively targeting $11.8bn. As shown in the chart above, this has increased year-on-year, excepting a slight decline in 2015 YTD, highlighting fund manager confidence in securing larger amounts of investor capital.

Additionally, these large funds are having considerable success in the marketplace; of the large vehicles that have closed in 2015 so far, 74% have met or exceeded their initial target size, collectively raising $58bn. The largest fund closed so far this year with a target of at least $1bn is Blackstone Real Estate Partners VIII, which reached a final close in September 2015 on $15.8bn, surpassing its initial $13bn target size. With a trend towards fewer relationships but with larger fund managers, growing proportions of private real estate capital are being secured by the most experienced fund managers.

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