European real estate debt funds raise record $10bn of capital this year

Real estate debt funds targeting Europe have already raised more capital in 2014 than in any year since the downturn, according to research from Real Estate Capital’s parent PEI Media Research and Analytics. In the first half of 2014 alone $9.97bn was raised by funds targeting Europe, accounting for 53% of all real estate debt funds […]

Pile of moneyReal estate debt funds targeting Europe have already raised more capital in 2014 than in any year since the downturn, according to research from Real Estate Capital’s parent PEI Media Research and Analytics.

In the first half of 2014 alone $9.97bn was raised by funds targeting Europe, accounting for 53% of all real estate debt funds raised globally and underlining the strides made by this category of new lenders to property.

The 2104 six-monthly total compares to $7.21bn raised for Europe in the whole of 2013, which was itself more than double the capital raised targeting the continent in 2012 (see chart below).

Capital raised by debt funds targeting Europe ($bn)
Capital raised by real estate debt funds targeting Europe ($bn)

The data, which was compiled for Real Estate Capital’s sister title, Private Debt Investor shows the increased interest in debt investment in Europe is in contrast to real estate debt funds in North America where the total raised in the first half of 2014 stood at only $2.71bn, suggesting a drop-off compared to the $8.65bn that was raised for the whole of 2013. Real estate debt funds raised for North America hit a peak in 2008 at $15.95bn (see next chart), a year when few investors had committed to property debt in Europe and when only $70m was raised to target Europe.

Capital raised by debt funds targeting North America
Capital raised by real estate debt funds targeting North America

In Asia figures suggest that real estate debt funds are becoming more popular but still only make up a small part of the market with $630m raised in the first half of the year which is only $30m less than the total raised in 2013.

Geographical focus of debt funds raised in H1 2014
Geographical focus of real estate debt funds raised in H1 2014 (%)

Globally there was $18.8bn raised for real estate debt funds in the first half of 2014. This appears to be roughly consistent with 2013 in which $32.11bn was raised during the whole year. Broadly, real estate is becoming more popular with investors in private debt relative to other sectors. Real estate made up 45% of total debt investment in the first half of 2014, the highest it has been since the downturn, and up from 31% for the whole of 2013.

The total haul for all forms of private debt investment in H1 2014, including infrastructure and private equity, was $41.8bn the survey shows. Over the last five years 30 funds raised a total of $318bn.

Of the capital raised for European property debt in the first half of 2014 about $2bn or 20% was targeting distressed debt investment rather than new lending. The largest real estate fund to close – Kildare Partners’ Kildare European Partners I – raised $2bn by final close in May for distressed debt investing. The largest debt fund for real estate to close globally was PIMCO’s $5bn Bravo Fund II, which has a global mandate and closed in March.

Total raised for real estate debt funds globally
Total raised for real estate debt funds globally
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