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Private Equity Sitting On $288B War Chest For CRE Deals

Private equity investors now have a total of $287.8B to invest in commercial real estate, up 11% from a year ago and up a whopping 57% compared with the end of 2019, Bloomberg reports, citing Preqin data.


“Investors view real estate as a safe place to be in an inflationary and low-rate environment,” Blackstone Head of Real Estate Americas Nadeem Meghji told Bloomberg.

As of November, U.S. inflation measured by the consumer price index was running at 6.8%, the highest in about 40 years.

The amassing of funds continues apace. Earlier this month, Brookfield closed its latest flagship real estate debt fund, Brookfield Real Estate Finance Fund VI, or BREF VI, with total capital commitments of over $4B, well exceeding its initial target of $3B.

A diverse lot of investors put money into BREF VI, demonstrating the hunger for CRE across the investment spectrum: public and private pension plans, labor organizations, endowments and foundations, financial institutions and insurance companies, according to Brookfield.

Moreover, capital came from many parts of the world, including the United States but also Canada, Europe and the Asia Pacific region. BREF VI will focus on lending against real estate assets in major U.S. metros, as well as assets in the UK and Europe.

Also in December, investment firm Carlyle raised about $8B for its ninth U.S. real estate opportunity fund, Carlyle Realty Partners IX, which exceeded its $6B initial target. Its predecessor, CRP VIII, raised $5.5B in commitments in 2018.

Bain Capital Real Estate has closed a fund in December as well, which at $3B was nearly double its initial target. The fund is the second one focusing on real estate for Bain and about twice the size of the first, which has invested in residential properties and life sciences assets, among other things.

Real estate investment deals so far this year are higher in both number and value when compared to Q3 2020, according to Preqin. The number of deals increased 38% in Q3 2021 compared to the same quarter a year earlier, and aggregate deal values were 102% higher than in Q3 2020.

On average, real estate-oriented funds are getting larger, with total capital raised in Q3 2021 at $39.2B, up 46% from Q3 2020, the company reports.