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The Mortgage Bankers Association expects 2022 volume for commercial and multifamily mortgages to be comparable to last year

Fundraising in 2021 Seeks Bigger Investors, Not More of Them

Commercial real estate investors believe capital will be more abundant this year, and nearly all (94%) plan to fundraise, judging by a survey from Juniper Square. While existing investors contributed the most capital in last year’s fundraising, sponsors are looking to new investors for growth in 2021, and they plan on using referrals from existing investors to reach them. 

In February, Juniper Square fielded a survey that covered fundraising goals, strategies (including the use, or not, of fundraising technology) and performance. One-hundred and forty-two senior executives at U.S.-based CRE firms participated, representing a cross-section of regional and nationwide sponsors with a mix of property types.

Capital commitments between $150,000 and $300,000 were the most common among survey respondents, according to Juniper Square. The fundraising cycle from first call to final close averaged 22 weeks. That cycle ran longer for companies with more assets under management, with those managing between $301 million and $2 billion averaging 50 weeks to close their funds.

While most capital was raised from existing investors in 2020, this year, 81% of sponsors are looking primarily to new investors to grow this year. Those who plan to seek new individual investors slightly outnumber those who will tap into new institutional investors. 

Sponsors’ top priority this year is attracting larger investors, ranked in the lead by nearly 60% of respondents. It’s well ahead of attracting more investors as first priority.

Referrals will be the top strategy to find new investors, used by more than 80% of respondents. That’s not surprising, says Juniper Square, since finding new investors was ranked the most time-consuming part of the fundraising process. Along with referrals by investors, sponsors also plan to use other referrals, PR/media, events, digital marketing and social media to seek out new fund participants.

Most of the sponsors participating in the study are using fundraising technology, with CRM systems being the most common. Those using technology reported average capital commitments that were twice as large as those not using technology. 

For many respondents, offering data rooms saved time in the fundraising process. Sponsors not using these were 76% more likely to rate investor presentations as the most time-consuming part of fundraising, says Juniper Square.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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