Boost in real estate investment fundraising slows
Real estate funding pools face more challenges in the coming months when raising money for investments, despite a good year so far. A blog post from Preqin, an alternative investment analytics firm, concludes that macroeconomic uncertainties and regulatory changes confound potential investors. According to analyst Farhaz Miah, 440 private real estate funds in the global markets secured $151 billion through October. That's more than three times the amount of capital that was raised in all of 2010. However, for the aforementioned reasons, Miah predicts only large, institutional fund raisers will continue to see success with arranging funding for real estate investments. "Funds targeting smaller amounts of institutional capital, usually specialists in the sectors or geographies they operate within, seemingly spend a shorter time in market," writes Miah. Some 71% of funds raising less than $500 million this year or last closed within 18 months, according to Preqin. In contrast, a significantly lower 57% of funds, raising up to $1 billion, closed within an 18-month period. "The total length of time spent in market by real estate funds that achieved a final close in January-October 2011 has decreased when compared to funds closed in 2010," said Miah. "The ability of funds to exceed their fundraising targets, with almost 50% of funds achieving or exceeding targets in 2011, also suggests more favorable conditions for those real estate managers that are able to position themselves correctly." Write to Jacob Gaffney. Follow him on Twitter @jacobgaffney.