Mega fund closures propelled real estate fundraising in 2019 to reach $151 billion, setting an all-time high for annual capital raised since 2008, according to the latest data from Preqin.
The three largest funds of 2019 collectively raised $43.5 billion, including private equity giant The Blackstone Group Inc.'s Blackstone Real Estate Partners IX LP — the largest real estate fund to date — with $20.5 billion in capital commitments.
Motivated by the success of the fundraising activity, the number of funds at the start of 2020 was up 36% at 918. The 918 funds collectively seek to secure $281 billion from investors. However, the number of investment vehicles that held their final closes in 2019 was down 39% year over year to 295.
"[T]he steep decline in the number of funds closed shows how unevenly that capital is distributed — concentration among the largest fund managers is greater than ever, and the overall success of the market does not mean that first-time or smaller fund managers can expect to meet with easy success when they bring new vehicles to market in 2020," Preqin Head of Real Estate Justin Hall said in the release.
Real estate deals slowed down in 2019, with 9,328 transactions valued at $410 billion completed, compared to the 9,795 deals valued at $457 billion that were closed in 2018.
Fund managers deployed significant amounts of capital in 2019, with dry powder, as of December 2019, standing at $319 billion, down from $331 billion at 2018-end.