Which Real Estate Strategies Hold the Most Dry Powder? – May 2016

by Darren Fernandes

  • 06 May 2016
  • RE

Preqin’s Real Estate Online contains performance data for over 1,450 closed-end private real estate funds. As of April 2016, closed-end private real estate funds have a record $240bn available in dry powder, up from $210bn in December 2015. The largest proportion of uncalled capital was in opportunistic funds ($104bn), a significant increase from the $72bn recorded in December 2014. Funds focused on value added investments represent the second largest proportion, albeit significantly lower than opportunistic, with $57bn in dry powder, representing 24% of the total. The lowest amounts of dry powder are held in core-plus ($12bn) and distressed funds ($8.8bn). The rest of the total is made up of debt funds and core funds, which hold $36bn and $21bn in uncalled capital respectively.

Total dry powder in the industry has increased by 54% since December 2012, reflecting the strong fundraising of recent years. In 2012, 287 real estate funds closed securing an aggregate $72.8bn, compared with 215 funds securing $112.3bn in 2015. With the majority (82%) of institutional investors surveyed by Preqin in November 2015 looking to commit more or the same amount of capital to private real estate funds in the next 12 months, dry powder in the industry should continue to grow. With dry powder already at an all-time high, this could exacerbate concerns over competition for assets and rising valuations.

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