Global property funds face tough 2012

LONDON Thu Jan 5, 2012 1:44pm GMT

LONDON (Reuters) - Private equity real estate funds face a challenging fundraising landscape in 2012 as investors grow more cautious about coughing up fresh capital amid growing global economic uncertainty, Preqin said on Thursday.

The research firm's December survey of 180 institutional investors from North America, Europe and Asia found 53 percent do not expect to make new commitments this year, while 11 percent said they might considering doing so.

The remaining 36 percent said they did plan new property fund commitments in 2012. At present, 450 funds are in the market seeking an aggregate of $165 billion, Preqin said.

The 47 percent of respondents that said they expected to, or were considering, making new fund commitments in 2012 compares with 51 percent in a similar survey of about 100 investors taken by Preqin at the end of 2010.

"The wider economic uncertainty is a factor for a lot of these investors, and they're being overly cautious and not looking to make new commitments," Andrew Moylan, manager of Preqin's real estate data, told Reuters.

"Also, a lot of institutions have capital tied up in existing fund commitments ... there's not a slew of capital coming back that they need to reallocate," he said, adding investors would likely focus on funds with strong track records.

For 2011, Preqin said 114 funds raised $44.4 billion, down from $45.4 billion the previous year and far below 2008, when the sector pulled in $140.8 billion.

Sixty-three funds with a primary focus on the North American market raised commitments of $28.1 billion, while 26 European funds collected $8.9 billion, and 25 Asia and rest of world-focused funds garnered $7.4 billion, Preqin said.

In 2011, it took an average of 16.3 months to close a fund, against 16.1 months a year earlier. The biggest fund to close was the Lone Star Real Estate Fund II, which raised $5.5 billion.

(Reporting by Brenda Goh; Editing by David Hulmes)

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