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Private Fund Closings Experience Precipitous Drop
Nearly $90 billion was raised by managers of closed-ended real estate funds during the first nine months of 2018, according to research by PERE. That marks the first time since 2015 that the market has experienced an increase in the capital raised in the Q1 to Q3 period.
Still, PERE’s Q3 Fundraising Report notes the number of funds closed at this point in the year is surprising. PERE writes, “With just three months remaining of 2018, fewer than half the 2017 total have closed so far: 114 in Q1-Q3 compared to 246 in the whole of 2017.”
The continued consolidation of capital is resulting in fewer, but larger funds dominating the closed-ended real estate landscape. Average fund sizes have increased from $486 million in 2017 to $771.4 million in 2018 to date.
PERE projects fundraising to reach about $125 billion by the end of 2018, a figure that would surpass the 2017 total of $119.5 billion. The number of funds closed is expected to reach around 150, well short of the 246 closed in 2017, points out PERE.
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