Fundraising subdued but comeback expected

Private real estate debt vehicles raised almost $4.7 billion in the first quarter of this year, according to data from PDI Research & Analytics.

Albeit that the first quarter of any year is typically quiet for fundraising, this figure would imply that the market remains subdued compared with the peak total of almost $38 billion that was raised in 2013.

However, a relatively high 16 funds achieved a closing of some kind in the first quarter of this year – implying that small managers seeking modest amounts of capital currently dominate the fundraising market.

In the record breaking year of 2013, only 41 funds in total posted closings, but the average amount raised by each was much larger.

Bruce Chapman, a partner at placement agent Threadmark, says he expects some of the bigger, more established managers will return to market as the year progresses. “We expect it will come back and be an attractive space to invest,” he said.

He added: “A few years back the space was very nascent but now there are some established managers who have been successful in raising funds. We expect some of them to come back into the market over the next six to 12 months.”

Among the vehicles to achieve a close in the first few months of this year was Cheyne Capital Management’s Real Estate Credit Holdings Fund III, which raised $770 million and beat a $650 million target when it was wrapped up in March. The fund focuses on direct real estate loans, especially in the UK and Germany.

Real estate funds accounted for close to a third of the $15.4 billion that was raised by private debt funds as a whole in the first quarter, according to the PDI figures.

This figure for the entire debt fund universe, which saw 27 funds post closings, marked a significant slowdown from the whole-year peak of $109.5 billion last year when 149 funds raised capital.