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Laxman Pai, Opalesque Asia: Private real estate fundraising fell in Q1 2020 as a result of the impact of COVID-19, said a study.
According to Preqin, managers raised $18bn from 51 funds closed, vs.$51bn raised from 83 funds closed in Q1 2019. Investors directed their capital toward funds managed by larger, more established GPs, it said.
An example of such a fund is Westbrook Real Estate Fund XI, managed by US-based Westbrook Partners, a value-added real estate fund that closed at $2.5bn in February 2020.
In terms of strategy, opportunistic real estate funds - which offer a higher reward at higher risk - raised significantly less capital compared with the same period last year.
Opportunistic funds collected $0.9bn, which is sharply down from $22bn in Q1 2019, but it's important to note that the $22bn figure was boosted by the closing of the $15bn Brookfield Strategic Real Estate Partners III in January 2019.
Excluding this fund, the drop in the total amount secured by opportunistic funds is 88%. That suggests investors may be taking a more cautious stance. It also marks a reversal from a trend Preqin noted in its 2020 Preqin Global Real Estate Report: in 2019, aggregate capital raised by opportunistic funds surged by 38% to almost $70bn.
On the deals front, activity declined across all property sectors and regions in Q1 2020.
In total, 1,797 private equity real estate (PERE) deals were completed globally for an aggregate value of $73bn.
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