Scales Tip Towards Large Private Equity Firms as CRE Fundraising Slows
February 25, 2019 | Beth Mattson-Teig | National Real Estate Investor
Private equity real estate funds are bracing for more competition in the coming year as fundraising appears to be pulling back from record highs.
According to London-based research firm Preqin, fundraising declined by 10.6 percent in 2018 to total $118 billion. Although still at a robust level above $100 billion, it is the lowest level since 2013, when fundraising totaled $109 billion. Preqin does expect 2018’s fundraising figures to rise slightly as more data becomes available. “The drop in levels won’t be as significant as they look now. In fact, real estate funds raised over $100 billion for a sixth consecutive year—a notable feat,” says Tom Carr, head of real estate at Preqin.
That being said, data does show that private equity real estate funds are taking longer to close at about 18 months on average. In addition, fund managers at the top end of the market are succeeding at the expense of smaller and more inexperienced managers. According to Preqin, the 10 largest funds accounted for 35 percent of capital raised in 2018.