Private equity real estate funds are on course to raise more than US$100bn in 2008 reports Private Equity Intelligence, the London-based data provider. In the opening quarter of 2008 alone, US$25bn has already been raised, with Blackstone Real Estate Partners VI becoming the largest fund of its type ever raised with US$10.9bn.
It is an opportunistic fund which received commitments from Pennsylvania State Employees’ Retirement System, Arizona State Retirement System and the State of Connecticut Retirement Plans and Trust Funds.
A total of US$543m was raised by two core plus funds in Q1, US$4.75bn by eight value-added funds, and US$18.8bn by 13 opportunistic funds.
Two real estate fund-of-funds were closed in the first quarter of this year, raising a combined US$1bn. Eleven US focused funds raised US$16.3bn, nine European focused funds raised US$6.7bn, and six rest of the world funds raised US$2bn.
A total of 307 real estate funds are currently in fundraising mode, looking to raise an aggregate US$167bn. Over 100 of these have already reached interim closes, and these are hoping to raise a total of US$53.8bn.
Ignatius Fogarty of Private Equity Intelligence said: ““Despite what many commentators have predicted investor appetite for private equity real estate funds remain very high among investors. 2008 could see a new fund raising record for the asset class and see private equity real estate funds break the US$100bn mark for the first time. However there has been an increase in number of funds on the road meaning that conditions remain very competitive. Investor appetite is high and the fundraising climate is strong, but managers are going to have to work hard and effectively market their funds to investors in order to have a successful 2008.”
In a separate report, the company also found that fundraising for all private equity classes has raised a near record US$163.5bn in Q1 2008. A total of 171 funds raised this amount, and only Q2 2007 saw more money captured by private equity firms (US$195bn).
Tim Friedman, also of Private Equity Intelligence, believes that PE fundraising will exceed US$500bn. “The challenge facing managers will now be to invest the capital they have raised, and it appears likely that managers will be chasing a higher number of medium sized deals in 2008 rather than embarking on the mega deals that we have witnessed in recent years.”
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