Property Private Equity Fundraising
Property Private Equity Fundraising
Property Private Equity Funds Struggle to Raise Capital
I’ve spoken with several professionals in real estate looking for private equity funding for big property development projects but the funding is rarely available in the last two years. One factor for this problem, aside from the turmoil in the housing and real estate market, is that property-focused private equity funds are having a terrible time fundraising. The number of real estate private equity fund launches fell by more than 25% last year, after a significant drop in values led managers to reconsider fundraising campaigns and executing new deals.
Property private equity advisor Swisslake Capital AG said 285 new funds raised a total $110 billion in 2009, some 53 percent less than the $234 billion raised in 2008.
Swisslake said the decline was partly due to a drop in support from risk-averse pension funds, which also found their investment plans frustrated by the “denominator” effect, which occurs when falling asset values force portfolio adjustments.
“Fund managers reported negative performance figures quarter after quarter, making it difficult for investors to regain confidence and feel comfortable that the market was finally bottoming out,” the report said.
“Many investors have also become much more demanding in terms of the due diligence process, delaying the initial commitments which can be a decisive factor for other investors to step into a fund,” Swisslake said. Source
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Tags: Property private equity funds, private equity funds, private equity property investment funds, property real estate, real estate private equity funds
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