12 May 2017
London
Reporter: Theo Andrew
Investors cautious over emerging fund managers
Emerging private real estate managers have closed fewer funds every year since 2012 as institutional investors target established managers, according to new research from Preqin.

First or second-time fund managers closed 72 funds last year raising $11 billion, down from the 100 closed in 2015, which raised $16 billion.

Emerging managers accounted for 27 percent of all funds closed in 2016, but only 10 percent of all capital raised.

This is compared to the closing of 34 percent of funds in 2015, raising 15 percent of market capital and 2011, a bumper year for emerging mangers, which closed almost half the funds, raising 41 percent of market capital.

The uncertainty of a lack of a track record deters investors from allocating capital to emerging firms, according to Andrew Moylan, head of real estate products at Preqin.

According to Preqin, 36 percent of investors would commit funds run by emerging managers, compared to 72 percent in 2009.

The average fund size of established managers in 2016 dwarfed emerging managers, $568 million to $154 million respectively.

Emerging managers are not being deterred as 207 emerging vehicles are in action, targeting $39 billion of capital, up from 167 funds seeking $31 billion this time last year.

Moylan said: “Many institutional investors are looking to reduce their roster of managers, and commit greater levels of capital to the largest, most experienced firms. Consequently, emerging managers have closed fewer funds each year since 2012.”

He added: “However, it is clear that institutions which have the resources to conduct due diligence on newer firms have the potential to be rewarded, with emerging managers frequently outperforming their more experienced counterparts.”

More news
The latest news from Real Estate Investment Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Top-end investors leaving hedge funds for real estate safe haven
21 July 2018 | London | Reporter: Theo Andrew
Factors such as low interest rates, well priced public equity markets and anticipation of a regulatory role-back have all helped boost investor confidence into real estate
San Diego pension fund plans sale of DAM assets
21 July 2017 | San Diego | Reporter: Theo Andrew
The pension fund has already committed to investing $47 million into RREEF America REIT II, a US open-ended core fund
M&G grows Nordic portfolio with industrial purchase
21 July 2017 | Denmark | Reporter: Theo Andrew
M&G Real Estate has acquired an industrial portfolio of three assets in Denmark, for €59.3 million
AXA IM - Real Assets completes Bodio Centre purchase
20 July 2017 | Milan | Reporter: Theo Andrew
AXA IM - Real Assets acquired the additional two office buildings and two retail assets in 2013
J.P. Morgan bags Denver apartments for $127.4 million
20 July 2017 | Denver | Reporter: Theo Andrew
Completed in 2015 at a development cost of $88 million, the class-A community spans 300 units with an average size of 1,243 square feet
UBS fully commits £242 million debt fund
19 July 2017 | London | Reporter: Theo Andrew
Since its final close in December 2015, the £242 million closed-ended fund has made 17 loans, building a portfolio of 74 assets across England and Scotland
Redefine covets larger share of International Hotel Properties
19 July 2017 | London | Reporter: Theo Andrew
Consideration will be made through the issue of 2.5 Redefine shares for every 1 IHL share held, meaning over 45.8 million of new Redefine shares will be allotted