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Alternative Market Briefing

Private real estate fundraising plummets to $18bn in Q1 2020 from $51bn in the previous year.

Thursday, April 09, 2020

Laxman Pai, Opalesque Asia:

After dropping off in Q4 2019, private real estate fundraising declined even further in the first quarter of 2020, said Preqin. Amid global economic challenges, total capital raised in Q1 2020 is more than 2x lower than in Q1 2019.

According to Preqin Quarterly Update: Real Estate, a total of 51 funds closed, raising just $18bn in aggregate capital - it is a long way off from Q1 2019 when 83 funds secured $51bn - over twice the capital raised in Q1 2020.

As economic uncertainty grips markets across the world, investors are continuing to concentrate their capital with the largest and most established real estate fund managers.

Indeed, a single fund accounted for almost 20% of the total capital raised in Q1 2020.

Westbrook Real Estate Fund XI, a value-added fund managed by US-based Westbrook Partners, closed in February 2020 on $2.5bn.

North America-focused real estate funds constituted the largest proportion of capital raised in the quarter.

Twenty-eight North America-focused funds reached a final close, securing a total of $12bn.

The two largest funds closed made up 46% of total capital raised for investment in North American real estate.

Fundraising data also shows capital is shifting further down the risk spectrum. Opportunistic funds raised only $0.9bn from 11 funds closed, which is a far cry from the $20bn secured by nine vehicles in Q1 2019.

Value-added funds captured the majority of investor capita......................

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