Private equity real estate funds in market double in number in four years


real estate_lrgThe number of private equity real estate debt funds in the market has more than doubled in the past four years as momentum in the investment area continues, new research shows.

A total of 53 funds are currently in the market targeting $22bn, up from 26 funds eyeing $10bn in May 2010 according to Preqin’s latest Real Estate Spotlight.

It said the majority of that capital is currently slated for European debt investments, with many fund managers looking to capitalise on the “vast availability” of debt opportunities in the region.

The report said that 10 closed-ended private real estate debt funds had already reached a final close this year, pulling in $13.2bn and surpassing the $12.2bn raised across the whole of 2013.

That figure puts 2012’s total in stark relief, with firms only able to close on $5.6bn of new capital during the year.

The largest real estate debt fund to close so far in 2014 is Pimco Bravo Fund II, which held a final close on $5.5bn in March, while Kildare European Partners I hit a $2bn final close earlier this month.

Andrew Moylan, head of real asset products at Preqin, said, “The notable growth in the number of fund managers launching real estate debt funds in recent months reflects the opportunities that many see to invest in real estate debt.

“The significant de-leveraging process that is still to take place in Europe is likely to explain the notable growth of Europe-focused offerings coming to market.

“This growth has been driven by established real estate fund managers diversifying their businesses to launch new debt platforms, and other firms entering the private real estate market for the first time.

“The $13.2bn raised by real estate debt funds globally in 2014 to date already makes this the most successful year for real estate debt fundraising since 2008.

“With substantial investor appetite for real estate debt exposure and a record number of funds on the road, it seems likely that the remainder of 2014 will see further strong fundraising for fund managers targeting real estate debt.”

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