Real estate funds raise $17bn in 2001

A new report highlights the enormous growth in opportunistic real estate private equity funds, particularly in Asia and Europe.

Professional services firm Ernst & Young has published research that reveals that ‘value-added funds’ recorded the biggest annual capital closing recorded by the sector in 2001, raising more than $17bn.

The survey, by Ernst & Young's real estate private equity funds services group, polled managers representing $72.3bn of equity in 145 funds raised between 1988 and 2001. It found that more than 60 per cent of the $20bn currently available for investment by opportunity and value added funds is targeted for investment outside the United States, with the most popular locations being Western Europe and Asia.

The survey also highlights a heavy concentration of capital in relatively few hands. EY says that 13 individual general partners raised about 70 per cent of the $72.3bn in equity raised in the last decade.

Commenting on the report, Dale Anne Reiss, global industry leader-real estate, Ernst & Young said: “Since 1991, our survey suggests the industry has raised in excess of $90bn for opportunistic investing in real estate. That's a very successful capital raising track record for any fledgling industry but particularly so in the real estate arena.'

Fundraising in 2001 was led by companies such as Lehman, which secured $1.6bn for the Lehman Brothers Real Estate Partners, and Soros Fund Management, which raised $1bn for the Soros Real Estate Investors CV fund. The trend has continued into 2002, with Chanin Capital Partners and Cohen Asset Management announcing the launch of the $300m Sainte Pierre Real Estate Liquidity fund, which will target properties that financially troubled companies are seeking to unload.