Private Equity Fundraising Hits 5-Year Low

By Allen Kenney

In the first quarter of 2009, worldwide private equity fundraising for real estate ventures reached its lowest point since 2004, according to new data from alternative asset research firm Preqin.

A total of 22 private equity real estate funds raised $13 billion in the first three months of 2009, according to Preqin. That marked the lowest total since the fourth quarter of 2004, when 45 funds raised $10 billion. The amount raised in 2009's first quarter represented a 28 percent decline from the previous quarter and a 59 percent drop from the year-earlier period.

Funds focusing on U.S. real estate accounted for the majority of new capital, raising $9.7 billion. European funds raised $3 billion for the quarter.

Preqin also found that the number of private equity real estate funds increased from 381 at the beginning of 2009 to 390 at the end March, implying that the market has grown increasingly competitive as more funds vie for less capital. Additionally, the amount of new fundraising being dedicated to debt and distressed assets—estimated to be as high as $7.6 billion—illustrated investors' interest in pursuing value opportunities resulting from the credit market downturn, according to Preqin.