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Investments / The Ticker

Investment capital available to private equity real estate firms reaches all-time high

$110 billion available to invest

Cash pile

Closed-end private real estate fund managers have $110 billion of equity available to make new investments, according to figures released by Preqin. The $110 billion available for investment marks an all-time high and an increase of $4 billion from December 2013.

The increase in available capital demonstrates a trend, as the $106 billion available in December 2013 was up significantly from the $89 billion available in December 2012.

“While there was a decline in fundraising for North America-focused funds in Q1 2014, compared with the last quarter of 2013, there have now been several consecutive quarters of strong fundraising, reflecting the growing institutional investor appetite for real estate funds,” said Andrew Moylan, head of real assets products for Preqin.

“As a result of this increase in fundraising, private equity real estate fund managers now have an all-time high of $110 billion available to invest in North America and with confidence in US real estate markets continuing to improve, these firms are likely to be very active in the coming months.”

Preqin report also states:

  • There are a record number of North America-focused private real estate funds in market as of Q1 2014, with 272 targeting a combined $89 billion, up from 256 targeting $78 billion as of Q4 2013, showing a strong interest in private real estate investment in the region.
  • North America-focused private real estate funds are taking less time to reach a final close; funds closed in Q1 2014 spent an average of 15.4 months in market, compared to 18.8 months for North America- focused funds closed in 2013. 
  • The largest primarily North America-focused fund that held a final close in Q1 2014 was Pimco Bravo Fund II, managed by PIMCO, which held a final close on $5.5 billion and is targeting debt, distressed and opportunistic opportunities.
  • Out of the 272 North America-focused private real estate funds currently in market, the largest proportion are following the higher risk value added and opportunistic strategies; there are 117 value added funds targeting $35 billion in capital commitments and 75 opportunistic funds targeting an aggregate $23 billion.
  • Funds targeting opportunistic and value added opportunities in North America have the most capital available to put to work (dry powder) as of March 2014 at $41 billion and $27 billion respectively. 

 

Read the full report here.

 

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