Some highlights from a recent search and analysis of our FundTracker database, the data from which was recently presented to an audience of 150 institutional investors, consultants and investment managers at our VIP – Asia Investor Roundtable conference in Hong Kong:
- The 858 funds around the globe that are currently on the market and actively seeking to raise capital collectively are seeking to raise an aggregate total of $402.06 billion. Asian funds are seeking to raise $41.03 billion.
- Some 350 of those 858 funds are focused on U.S. markets; 78 are focused on Asian markets.
- 34% of the funds currently on the market offer core/core-plus types of investment strategies.
- 56% of all the funds currently on the market around the globe are offering property type and geographically diversified strategies.
- Funds offering property-related debt strategies are the second-largest group of funds, representing 11% of all the funds currently on the market.
- The average size of the funds currently on the market is $700 million.
- 70% of the funds currently in the market were launched after Jan. 1., 2010. Of these, 25% are open-end funds; 35% of the closed-end funds currently on the market have been in fundraising mode for at least two years or longer.
- 106 funds held a final closing in 2012 versus 222 funds in 2008. (With FundTracker data, when we cite “closings,” we’re only talking about funds that have staged a final closing. Interim closings are not included in these numbers to avoid double counting.)
- $63.45 billion was raised by funds that closed in 2012 versus $155.28 billion in 2008 (to ensure consistency, all capital raised by the funds we’re tracking here have been stated in dollar-denominated numbers). In other words, funds closing in 2012 raised roughly half the amount raised by the funds that held a final closing in 2008.
- Reflecting today’s much more challenging fundraising environment, at least 17 funds extended their closing dates in 2012.
- The average length of time required from launch to close for all funds that actually held a final closing in 2012 was 18 months.
- 26% of the funds that closed in 2012 raised more than they targeted; many more — 45% — raised less than targeted.
- According to projections based on our annual investor survey conducted each year jointly with Kingsley & Associates, there currently is roughly $4 of offerings in the market for every $1 of investor appetite, or roughly four times of investment offering supply being offered than the amount that is actually needed to satisfy current investor demand.
- Those funds that were able to close in 2012 can be characterized, among other factors, by a significant number of investors from prior funds who “re-upped.” So second-, third- and more-time fund managers seem to have a significant advantage over first-time fund managers when it comes to fundraising success. The “haves” also can be distinguished from the “have-nots” in this fundraising environment by more clearly defined strategies, lack of terminally poor performance, and experience in communicating candidly and nondefensively with investors. Those who’ve had the most difficulty either have performed so poorly that investors simply can’t rationalize a decision to invest more capital with them and/or have mishandled their communications and therefore alienated their investor and consultant constituencies.
- The percentage of opportunistic funds that closed in 2012 was far lower in 2012 (29%) than closed in 2008 (37%), reflecting investor preferences for less risky investment strategies in today’s still fear-driven post-GFC climate.
- The number of blended strategy funds (funds that offered various combinations of core, core-plus, value-added and/or opportunistic strategies) that closed in 2012 was 26% of all offerings that closed in 2012, up from 20% in 2008.
- The number of funds targeting Asian markets that closed actually decreased from 14% in 2008 to 9% in 2012. But there has been a gradual increase in the number of Asia-focused offerings in recent years, and more investors around the globe now seem to be targeting Asian markets these days, so we expect the number of offerings closed as well as the aggregate amount raised by these types of offerings will only be increasing as the next few years unfold.
FundTracker is a proprietary database developed and maintained by Institutional Real Estate, Inc. To learn more about the FundTracker database, click here.
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Geoffrey Dohrmann is president and CEO of Institutional Real Estate, Inc.
