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Real estate fund managers face stiff competition to raise capital in today’s competitive marketplace. Yet investors are clearly gravitating towards those funds and managers who have a proven history of delivering results. Past performance and length of track record were cited as two of the three most important factors investors consider when looking for a real estate fund manager, according to survey results from the Preqin Investor Outlook: Alternative Assets for first half 2016. In fact, two thirds of the nearly 5,300 global institutional investors surveyed said they would not invest in first time funds.
As a result, there is a bigger gap emerging between established and emerging fund managers with capital that is clearly more concentrated among bigger industry players. As of May 1, 229 funds raised a total of $118 billion in capital over the past 12 months, according to Preqin. However, the top 10 real estate fund managers were responsible for raising more than one third of that volume at $40 billion. Based on Preqin latest research, here is a look at the funds with the most fundraising success over the past decade.
The Chicago-based fund manager raised $11.4 billion over the last decade in a total of 19 different funds. An independent subsidiary of JLL, LaSalle operates in 17 countries with 24 offices worldwide. LaSalle announced in May that it had acquired Blackhawk on Halsted in Chicago on behalf of its client Bayerische Ärzteversorgung, a Bavarian doctors’ pension fund. Blackhawk is a 225,000-sq.-ft. mixed-use project.
The Los Angeles-based fund manager has raised a total of $12.2 billion for closed-end private real estate funds in the past 10 years in a total of 19 funds. In June, CBRE Global Investors’ U.S. managed accounts group announced that it had acquired a 47 percent interest in 7 W 34th Street, a newly renovated class-A office and retail building in Manhattan, on behalf of Korea Post. The 12-story property is located in the Midtown South sub-market.
This Paris-based company has raised a total of $12.8 billion over the past decade in 18 funds. The AXA Group is one of the largest investment management firms in Europe with €666 billion ($743.5 billion U.S.) in assets under management, more than 4,700 clients and investments in 22 countries. AXA Investment Managers – Real Assets recently teamed up with BlackRock Real Estate in a 50-50 joint venture to acquire 6 Bevis Marks, a mixed-use property in London for €281 million ($313.6 million U.S.) on behalf of a private client.
Based in Washington, D.C., this company raised $13.5 billion in five closed-end private real estate funds in the past decade. The company’s active real estate funds pursue real estate investment opportunities in Asia, Europe and the U.S. Target acquisitions are typically single property assets that can be repositioned and improved to create added value. Carlyle’s real estate team has made more than 680 investments in 284 cities around the world, including office buildings, hotels, retail and residential properties, industrial properties and senior living facilities.
This Greenwich, Conn.-based fund manager raised $13.9 billion over the last 10 years in five closed-end private real estate funds. Last fall, Starwood Global Opportunity Fund X entered into an agreement to acquire a 72-property apartment portfolio with properties in six states from Equity Residential valued at $5.4 billion. The deal represented the largest non-hotel purchase in Starwood Capital Group’s history.
New York City-based Goldman Sachs raised $14.9 billion in six closed-end private real estate funds in the last 10 years. Real estate debt and equity is one of three groups operating within the company’s merchant banking division. Since 1991, Goldman Sachs has invested approximately $40 billion in capital through various real estate-focused investment vehicles across a number of geographies and property types in both equity and debt real estate securities. Its Real Estate Credit Partners funds were established to invest in real estate mezzanine loans, B-notes, CMBS and real estate-based corporate debt in North America and Europe with over $5 billion of capital invested since 2008.
Based in New York City, this fund manager raised $20.0 billion in four closed-end private real estate funds in the past decade. Morgan Stanley provides investment management to a diverse client base, including governments, institutions, corporations and individuals worldwide. In its 2015 report on “The Odyssey: Navigating Real Estate risk and Reward in a Low Yield World,” the Morgan Stanley real estate investing team analyzed the track records of institutional properties to identify characteristics of markets most likely to generate strong and consistent returns over time.
Based in Toronto, Brookfield raised $25.0 billion in seven closed-end private real estate funds in the last 10 years. In June, Brookfield Asset Management announced that it had closed its Brookfield Capital Partners IV with $4 billion in equity commitments. Brookfield also committed $1 billion of its own capital to the fund to ensure alignment of interests with other fund investors.
Dallas-based Lone Star raised $51.0 billion in closed-end private real estate funds in the past decad—more than twice as much as third place Brookfield Asset Management. Since the establishment of its first fund in 1995, Lone Star has organized 16 private equity funds with aggregate capital commitments totaling more than $65 billion. In April, Lone Star Funds announced the closing of its Lone Star Real Estate Fund V LP (US) and Lone Star Real Estate Fund V (Bermuda) with combined capital commitments of $5.9 billion.
