The year 2007 marked a new milestone for fundraising in private equity real estate. According to proprietary data from PERE magazine, private equity real estate funds raised a record $71 billion (€49 billion) last year, a 32 percent increase over 2006’s total of $54 billion, and more than twice the $34 billion raised in 2005.
Global funds accounted for nearly half of all funds closed, with North America-focused funds comprising a quarter and funds targeting Asia/rest of the world and Europe each accounting for 17 percent of the pie.
Morgan Stanley Real Estate and The Blackstone Group materially impacted 2007 fundraising figures. Both touted outsized global funds, Morgan Stanley with its $8 billion Morgan Stanley Real Estate Fund VI International and Blackstone, which already exceeded $10 billion on Blackstone Real Estate Partners VI fund, and has yet to officially announce a final close.
Even as global markets continued to dominate, emerging markets such as Brazil and India also attracted limited partner interest in 2007. Tishman Speyer raised $600 million for its Tishman Speyer Brazil fund and in Asia, SUN Group and Apollo Real Estate launched an India-focused fund, SUN-Apollo India Real Estate Fund with $630 million in capital. Late last year, Los Angeles-based Colony Capital also closed its $4 billion Asia-focused fund, Colony Investors VIII.
Just a month into 2008, the new year is already rocketing off to a strong start. Media entrepreneur Robert Johnson’s RLJ Development closed its $1.2 billion RLJ Real Estate Fund III in January and, in Europe, Cordea Savills launched a €300 million fund focused on property investments in Italy. Stockholm-based Niam also announced this week it was looking to raise €700 million from investors for its latest vehicle targeting the Nordic and Baltic countries.
However, the ongoing credit crunch across the global real estate market throws into question whether 2008 will be as big of a fundraising bonanza as was the year just passed.
A complete list of private equity real estate funds closed in 2007 appears in the February 2008 issue of PERE, out now. Click here to learn more.