Real Money: CRE Investors Raise More Than $8.3 Billion in October

Companies and funds reported raising $8.34 billion in October for real estate-related investments and financing. The amount raised brings the total inflow for the first nine months of the year to $79.28 billion from approximately 1,461 funds and firms.   CoStar Group tracks the fundraising activity of almost 2,000 entities on an ongoing basis and adds about 125 new entities per month.   For October 16 different funds and firms reported raising $3.88 billion earmarked for debt repayment; another 20 entities raised $1.45 billion for non-property-related investments, including debt, mortgage or securities purchases.

That leaves approximately $3.01 billion of the money raised available for property investments. At a conservative 65% loan-to-value ratio, the money raised in October that could go towards property purchases would generate about $9 billion in buying power.   Property sales of $1 million or more have totaled more than $15 billion in both September and August, according to CoStar Group’s COMPs database. (Additional October sales deals may be tallied as they are confirmed by CoStar’s research or included in public records. However, so far CoStar has verified more than $15 billion already in such sales.)

Of the total amount raised in October, $4.82 billion was from publicly offered shares in REITs and real estate operating companies with $3.88 billion specifically to be used debt repayment or refinancing. The other $3.5 billion came from private fund raising efforts and is all earmarked for new investment.   Pooled investment funds including private equity and hedge funds raised $1.82 billion far outpacing the $730 they raised in September, the lowest monthly amount for such funds this year.   The highest percentage of funds raised (approximately 28%) was earmarked primarily for office-related investments. Funds targeting lodging and resort investments raised 23% of the total; funds targeting debt/mortgages raised about 22% of the total. Multifamily-related amounts equaled about 9% of the total; retail, 7%; industrial 5% and health care about 3%.

The top three money raisers in October were MGM Resorts International, Brickman Associates and National Real Estate Advisors.