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Monday, 15 October 2018

Debt-Fund Sponsors Raised Record $32.3Bln Last Year; $21Bln So Far This Year

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Commercial Real Estate Direct Staff Report

Sponsors of real estate debt-investment funds last year raised a record $32.3 billion of equity commitments through 63 funds, according to Preqin.

And this year through September, 40 funds have raised $21 billion, putting the sector on track to at least come close to reaching last year's record.

Debt funds started becoming all the rage in 2013, when $19.8 billion was raised on behalf of 49 funds. That was more than triple the amount that was raised during the previous year as investment managers that typically pursued equity strategies broadened their scope, partly in response to demand from their investor clients. Those clients increasingly had added debt as part of their real estate allocations.

The capital was being lined up as banks and other traditional providers of short-term real estate debt continued to pull back, partly because of increasing capital requirements and industry consolidation.

The amount raised for debt funds so far this year is impressive, but it's roughly one-third of the $95.1 billion that has been raised by 216 equity real estate funds. Real estate funds now have on hand a record $289 billion of dry powder - the amount of capital ready to be invested.

Real estate debt funds, meanwhile, have another $57 billion of dry powder. That, too, is a record and contrasts with the $50 billion of dry powder they had as of the end of last year.

But Preqin, a London research firm, noted that institutional investors might be losing interest in debt funds. It found that only 6 percent of investors it surveyed recently viewed real estate debt as among the best opportunities available. That was down from 26 percent roughly a year ago. But that could be the result of all the capital that's now earmarked for debt investments. Dry powder among debt funds amounts to 19.7 percent of the dry powder held by equity funds. In 2008, their dry powder amounted to 10 percent of equity funds'.

The largest debt fund that completed fundraising this year has been Broad Street Real Estate Credit Partners III, sponsored by Goldman Sachs, which raised $4.2 billion that would be invested in Europe and North America.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.



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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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