All Raised Up and Nowhere To Go: Equity Funds Grow as Good Deals Shrink

Private equity real estate funds have reeled in huge sums of cash in recent years. And, so far, those windfalls show no sign of slowing — even amid endless talk of a downturn and intense competition for appealing deals.

During the first quarter of 2019, a total of $39B was raised from investors for private real estate around the world, according to figures released last week by research firm Preqin. That’s $8B more than the previous quarter, and it is in line with big raises over the last few years.

There is now significant amount of capital committed that is waiting to be deployed — some $338B of dry powder as of April — and fundraising has continued in rather grand proportions.

Blackstone Asset Management, for example, is said to be close to raising a $20B property fund, its biggest yet. Brookfield put a bow on a $15B fund in January. But as investors have continued to allocate hefty sums for real estate, the deals that have delivered stellar returns in recent years are increasingly harder to come by.

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