Real estate investors committed more capital to global funds but to fewer managers in the second quarter of 2020, said a report released Wednesday by Preqin.
Although the number of global real estate funds closed in the second quarter dropped to 53 from 78 in the first quarter, real estate capital raised increased to $39 billion during the quarter ended June 30 from $28 billion in the quarter ended March 31.
Funds from large, established real estate managers such as Blackstone Group and Rockpoint Group fared well with their funds during the quarter. Blackstone Real Estate Partners Europe VI closed at $10.6 billion in April, while Rockpoint Real Estate Fund VI raised $3.8 billion in June. Combined, those funds represent 37% of the total capital raised in the quarter.
Funds focused on riskier strategies raised the most capital, with opportunistic funds raising $22 billion in the second quarter.
Private equity real estate deal volume, however, plummeted in the second quarter, both in terms of number of deals and value. The number of private equity real estate transactions dropped to 988 in the second quarter, down 48% from 1,904 in the first quarter. Deal value fell to $30 billion in Q2, down 62% from Q1.
"As restricted travel and economic activity continues, an immediate bounce-back in activity looks unlikely," the report said.
There are currently 903 private real estate funds in market raising $273 billion vs. 916 funds raising $281 billion in January.
Of the real estate investors surveyed by Preqin, 77% indicated they are planning to make a single new real estate fund commitment in the next 12 months, up from 52% in the second quarter of 2019. In addition, 18% of investors plan to commit $600 million or more to private real estate funds over the next 12 months, an increase from 9% in the year-earlier quarter.
