Investors continue to have a strong preference for real estate debt funds according to a report published by real estate association INREV.
The INREV Debt Vehicles Universe 2020 study showed that non-listed real estate debt products had a record high of €32bn raised globally in 2019 as it continued to attract attention from institutional investors and investment managers.
The study, which currently includes 81 vehicles with total minimum target equity of €48.9bn, showed that the amount raised represents a 50% increase on 2018’s €21.4bn and is significantly higher than in any given year since INREV records began in 2013.
INREV said a survey on investment intentions revealed that investors in North America and Asia Pacific have a strong preference for non-listed real estate debt strategies.
“In Europe, where the private debt market is still immature – it is not yet in the top three preferred strategies for investors in this region – but it is growing strongly,” the real estate association said.
INREV also said debt vehicles posted strong performance expectations in 2019, with the average target internal rate of return for all vehicles of 7.7%.
Iryna Pylypchuk, INREV’s director of research and market information, said: “These data point to a general uptick in investor interest in real estate debt vehicles latterly, and judging from the latest announcements capital raising activity for debt strategies continues strongly.
“We believe the INREV Debt Vehicles Universe study already delivers greater transparency of, and insight into, the non-listed real estate debt space for market participants.
“However, our longer-term aim is to continue to build coverage and to create the very first European private debt vehicles performance index to enable a more comprehensive analysis of the market as it continues to evolve.”
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