The bifurcation that has been a hallmark of the current recovery has at least one more iteration: the success a handful of major private equity firms have had lately with raising real estate funds, and the slowdown in fundraising globally. A lack of transaction volume has thwarted investors, although there are encouraging signs on the horizon, not least of which is the renewed interest of overseas sources.
London-based research firm Preqin reported in January that private equity real estate funds raised just $35.8 billion in 2010, marking a seven-year low. In March, the firm reported a survey showing that just 45% of institutional investors were planning to commit to the funds this year, compared to 62% a year ago.
It’s not as though the funds aren’t necessary. At the Akerman Senterfitt 2011 Real Estate Summit held in Miami this past March, Jeffrey DeBoer, president of the Washington, DC-based Real Estate Roundtable, pointed out that about 70% of the $1.4 trillion in maturing commercial debt is in CMBS, and it’s estimated that $1 trillion in equity will be necessary for that debt to be refinanced. “Where is that equity going to come from?” DeBoer asked.
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