LONDON—More capital was distributed to private real estate fundinvestors in 2013 than in any year previously, with a total of $138billion returned to investors globally as a result of managersselling assets, Preqin said Thursday. That's morethan double the $67 billion they received in 2012.

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“The increase in valuations in many real estate markets aroundthe world, and improving confidence leading to a good supply ofpotential buyers, has enabled fund managers to realize many oftheir investments,” says Andrew Moylan, head ofreal assets products for Preqin, headquartered in London and NewYork City. “2013 was a record year in terms of distributions toinvestors and the first year since 2003 in which the amount ofcapital distributed to limited partners exceeded the amount ofcapital called up to make new investments.” Accordingly, Moylansays, “these institutional investors have more capital available toreinvest in real estate funds, and many plan to place large amountsinto private real estate funds in the coming year.”

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With an uptick in capital distributions, many investors havebeen able to re-invest previously tied up capital into new funds,further bolstering the private real estate fundraising market. As aresult, Preqin's recent investor survey revealed that institutionalcommitments to commercial real estate increasedover the past year, with 52% of investors surveyed last monthsaying that they had committed to real estate funds in the previous12 months, more than in any other period since December 2009.

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Last year also saw capital distributions exceed the amountinvested in real estate, with $92 billion of equity deployed byprivate fund managers in real estate assets compared to $138billion retruned. The year prior had seen the highest level ofcapital called by private real estate managers in any single year,with $130 billion in capital called from investors over the year.This narrowly surpassed the $129 billion called in 2007, and wasnearly double the amount of total distributions.

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With distributions increasing and investors therefore able toaccess previously tied-up capital, 82% of real estate fund managersbelieve investor appetite for private real estate investment hasincreased over the past 12 months. However, Preqin notes thatinvestors have become increasingly demanding regarding informationon investments and performance, and as a result 38% of real estatefirms surveyed said they'd be bolstering their investor relationsteams over the next 12 months.

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Fifty-five percent of active institutional investors plan toinvest $100 million or more in private real estate in the comingyear. That compares to just 40% of investors surveyed a yearago.

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Fund managers remain confident of finding attractiveopportunities in real estate, Preqin says. Sixty-three percent ofmanagers expect to invest more capital over the next 12 months thanthey did in the past year, with 37% saying the increase ininvestments will be significant, while just 14% expect to investless.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.