Record level of capital raised for non-listed real estate debt: INREV

A record €8.9 bn of new capital was raised for non-listed real estate debt funds in 2013, according to the latest Capital Raising Survey from non-listed funds body INREV.

European investors were the most active, investing almost three-quarters of the total capital. By country strategy, the UK alone was responsible for more than €2 bn of new capital. By comparison, the total raised for joint ventures and club deals was €3.5 bn.

INREV’s survey of 147 fund managers found that the non-listed real estate industry raised a total of €47.3 bn of capital last year. The bulk of this - €18.1 bn – was allocated to non-listed funds, the highest amount raised since 2007, and 77% higher than the average raised between 2008 and 2012.

European capital accounted for less than half (47.3%) of this. Its share in joint ventures also fell significantly, from 82% in 2012 to 57.7% in 2013.

North American and Asian investors both increased their market shares significantly, driven by an appetite for opportunity and value added products. More than a third (35.7%) of the capital committed to non-listed funds in 2013 originated in North America, with a further 16.6% coming from Asia.

Pension funds continue to be the largest source of capital for non-listed funds (55.8%) and separate accounts (48.4%), while sovereign wealth funds (49.8%) were the largest source for joint ventures and
club deals.

In terms of investment strategy, 42.9% of new equity in 2013 went to opportunity funds – up from just 8.4% in 2011. This corresponds to a significant drop in the amount allocated to core funds over the same period – from 86% in 2011 to 44.9% in 2013.