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Alternative Market Briefing

North American private equity real estate market sees a sharp fall, says Preqin

Friday, August 07, 2020

Laxman Pai, Opalesque Asia:

North America-focused commercial private equity real estate (PERE) funds raised just $23bn through 47 closures in H1 2020, a sharp fall from 152 funds that secured $83bn in 2019 as a whole.

"The COVID-19 pandemic has hit the North American commercial real estate market hard. PERE fundraising reached a peak in 2019, as funds secured $83bn, and seemed to be set to match that in 2020," said a report by Preqin.

PERE dealmaking also declined, from over 3,600 deals made in 2019 to less than a thousand in the first half of 2020.

According to the report, exact figures are 3,639 deals that were completed in 2019, but as of June 2020, just 968 have been made. Deal values have fallen from $180bn to $38bn in the same period.

The retail and hospitality sectors have been most severely impacted, as these properties have been most exposed to the economic slowdown, but office and industrial activity has also declined. H1 2020 saw just $3.4bn in PERE deals made in the retail sector and $6.0bn in the hospitality sector. Dealmaking for office assets also declined from $90bn in deal value in 2019 to $19bn in H1 2020.

California is still the most valuable dealmaking state, with $5.3bn in deal value recorded in H1 2020. But Massachusetts and Texas have proved the most resilient markets. Their mid-year totals of $3.2bn and $2.0bn respectively put them on track to match their 2019 totals.

As of December 2019, North America-focused commercial PERE asse......................

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