Private equity real estate fundraising down to 2004 level

Seven private equity real estate (PERE) funds focused on Europe raisied a total of $3 bn (EUR 2.3 bn) on their final closing in the first quarter of 2009. Consultancy Preqin said another 13 PERE funds closed in the US having raised $9.7 bn in the first three months of the year and just two closed in Asia with EUR 300 mln.

Preqin noted that a quarter of the funds with a primary focus on the US would also invest elsewhere. The total of 22 funds across the three regions good for $13 bn globally was the lowest fundraising quarter for private equity real estate funds since the final quarter of 2004, in which 45 funds raised $10 bn. It is estimated that about $7.6 bn of the total raised globally for PERE funds will be invested in debt and distressed real estate.

The number of PERE funds on the road actually increased during the first quarter of 2009 from 381 in January to 390 by March, but the aggregate target value dipped slightly from $228 bn to $227 bn. Preqin said the number of funds abandoning fundraising has also risen globally. There were 14 confirmed cases of fundraising being abondoned in the first quarter of 2009, compared with 17 in 2008 and 12 in 2007.