RE funds raise EUR 7.7b in Q2: Preqin

Private equity real estate fund-raising rebounded strongly worldwide in the three months to end-June 2011, with 18 funds reaching a final close and raising a total of $11.2 bn (EUR 7.7 bn), according to Preqin, a data provider on the alternative asset sector.

The total volume registered in Q2 2011 marks an increase on the $8.9 bn which was raised in Q1 2011 and the $7.1 bn raised in Q4 2010. Fund-raising remains challenging, and is still well below the levels seen in 2006-2007, Preqin said.

Funds with a primary focus on North America raised the most capital, with 10 funds receiving aggregate commitments of $8.6 bn. Five Asia and rest of world-focused funds raised $1.4 bn. Europe was the weakest region, with three Europe-focused funds raising $1.2 bn

Andrew Moylan, manager of real estate data at Preqin, said: 'The results from Q2 will give some encouragement to fund managers that are currently marketing their funds. That Lone Star Funds, which closed its Lone Star Real Estate Fund II with commitments of $5.5 bn, was able to raise the fifth largest private equity real estate fund of all time highlights that firms can raise substantial amounts of capital from institutional investors in the current environment.'

'Several funds to close in the quarter did so above target, again indicating that fund-raising success is possible in the current environment. As deal levels increase and as a result more distributions occur, investors will have more capital available to make new commitments which is likely to further improve fund-raising,' Moylan said.

'This will be a gradual improvement, and with the market remaining extremely overcrowded, many firms will still be facing long periods in market and others will be forced to abandon their fund-raising efforts.'