Private equity is sitting on a $ 288 billion war chest for CRE deals
Private equity investors now have a total of $ 287.8 billion to invest in commercial real estate, 11% more than a year ago and a whopping 57% more than at the end of 2019, Bloomberg reports, citing Preqin data.
“Investors see real estate as a safe place in an inflationary and low interest rate environment,” Nadeem Meghji, Blackstone’s head of Real Estate Americas, told Bloomberg.
In November, the US inflation rate, as measured by the consumer price index, was 6.8%, the highest in about 40 years.
The accumulation of funds continues. Earlier this month, Brookfield closed its newest flagship real estate loan fund, Brookfield Real Estate Finance Fund VI or BREF VI, with total capital commitments of over $ 4 billion, well above its original target of $ 3 billion.
A multitude of investors put money in BREF VI, demonstrating the hunger for commercial real estate across the investment spectrum: public and private retirement plans, labor organizations, foundations and endowments, financial institutions and insurance companies, Brookfield said.
In addition, capital came from many parts of the world, including the United States, but also Canada, Europe, and the Asia-Pacific region. BREF VI will focus on real estate lending in major US metropolitan areas, as well as assets in the UK and Europe.
Also in December, investment firm Carlyle raised around $ 8 billion for its ninth US real estate fund, Carlyle Realty Partners IX, which surpassed its original target of $ 6 billion. Its predecessor, CRP VIII, raised $ 5.5 billion in pledges in 2018.
Bain Capital Real Estate also closed a fund in December that, at $ 3 billion, was almost double its original target. The fund is Bain’s second real estate focus and around twice the size of the first to invest in residential real estate and life sciences assets, among other things.
According to Preqin, real estate investment transactions to date this year are higher in both number and value compared to Q3 2020. The number of deals rose 38% in the third quarter of 2021 compared to the same quarter of the previous year, and the aggregate deal values were 102% higher than in the third quarter of 2020.
On average, real estate-oriented funds are growing with total capital in the third quarter of 2021 $ 39.2 billion.