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PE real estate fundraising slowed in Q2 after gangbusters start to year

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PE real estate fundraising slowed in Q2 after gangbusters start to year

Private equity real estate fundraising slowed in the second quarter, as capital inflows normalized after an especially strong first quarter and end of 2017.

Together, 48 funds collected $23 billion during the quarter, research firm Preqin said, noting that the second-quarter figures could change by as much as 10% as new data becomes available. By comparison, 75 funds raised $38 billion in the first quarter.

"With such a flurry of fundraising in the previous six months, it is perhaps not surprising that Q2 saw lower fundraising totals," Oliver Senchal, head of the firm's real estate products, said in a report. "However, it was by no means a bad quarter so much as it was a return to more typical levels."

Value-added and opportunistic funds remained popular, with 23 value-added funds garnering $11 billion and 10 opportunistic vehicles collecting $3.7 billion. Only six core and core-plus vehicles closed, having raised just $1.4 billion.

North America-focused funds raised the most capital, at $15 billion. Europe-focused funds raised $6 billion and Asia-directed funds collected $1.7 billion.

Landmark Real Estate Fund VIII, a secondary vehicle, was the largest fund that closed during the second quarter and the largest of its kind ever closed.

Dry powder in the sector rose to $290 billion as of the end of the first half, up from $249 billion at the close of 2017.