PERE – $30 billion raised in real estate funds in 2009

Real estate fund managers corralled just $30.4 billion of commitments for value-added and opportunistic property vehicles in 2009 – less than a third of the peaks witnessed in 2007.

Data from PERE magazine reveals 57 commingled real estate vehicles held closes last year, with European-focused funds leading the charge.

Of the total amount of capital  raised in 2009, 35 percent was invested in Europe-focused funds,  compared to 26 percent deployed to vehicles targeting the Americas and  17 percent focused on Asia. Among the European funds that closed in 2009  were The Blackstone Group’s €3.1 billion Blackstone Real Estate  Partners Europe III and Orion Capital Management’s €1.28 billion Orion  Europe Real Estate Fund III. Global strategies attracted 22 percent of  all capital commitments.

The figures however are  significantly off the peak of 2007, when $85.2 billion was raised for  value-added and opportunistic strategies. Last year’s fundraising total  even failed to top 2005 levels – when PERE first started collecting data  – when $37.4 billion was raised by GPs.

In the wake of the credit  crisis, large numbers of institutional and individual investors held  back from making new commitments to the asset class as they sought to  evaluate existing investments.

According to a report from placement agent CP Eaton  this week, European real estate limited partners pushed 2009 allocations  into 2010 owing to concern over the “global macroeconomic picture and  capital adequacy ratios”, while in the US only the highest quality,  legacy-free fund sponsors – with a “demonstrated track record of  distressed performance and/or those niche oriented operators” – are able  to raise equity commitments.

More than 200 private equity  real estate funds are currently raising capital globally, according to  the proprietary PERE data, which does not track core, core-plus or debt  vehicles. Sources add there are roughly 90 real estate debt vehicles  currently in market seeking capital in the US.

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