Real estate PE funds raked in $11 bn in Apr-Jun: report

Real estate-focused private equity funds raised $11.2 billion from investors in the April-June period of 2011, 26% more than in the January-March quarter, says a report.

According to a study by research firm Preqin, 18 private equity funds dedicated to the real estate raised an aggregate $11.2 billion in the second quarter of 2011 as compared to $8.9 billion in the previous quarter.

The June quarter mop-up was much higher than the $7.1 billion raised in the fourth quarter of 2010.

"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.

"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," Preqin Manager (Real Estate Data) Andrew Moylan said.

In terms of geography, five private equity firms in Asia raked in $1.4 billion, while three Europe-focused funds garnered $1.2 billion.

Funds with a primary focus on North America mopped up the most capital, with 10 such funds receiving an aggregate commitment of $8.6 billion.

The most successful private equity fund during the quarter in terms of fund-raising activities was Lone Star Real Estate Fund, which mopped up $5.5 billion, followed by Och-Ziff Real Estate, which raised $840 million, and Pramerica Real Estate Capital I, which attracted $786 million.

"Several funds that closed in the quarter did so above target, again indicating that fund raising success is possible in the current environment," Moylan added.

There are currently 435 private equity real estate funds in the market, targeting aggregate commitments of $138 billion in the third quarter of 2011. This is a small decline in comparison to the quarter ended March 31, 2011, when 439 funds were targeting $160 billion.