By Ilaina Jonas
NEW YORK, July 7 (Reuters) - Fund-raising by real estate private equity firms reached a 5-year low in the second quarter as investors remained worried about falling values, according to alternative asset research firm Preqin.
Sixteen funds dedicated to real estate investment raised a total of $8.9 billion, the lowest quarterly total since the 2004 third quarter, when 22 private equity real estate funds raised $8 billion, the UK-based firm said in a report released on Tuesday.
'With many investors still unable to commit new capital, and with other investors more cautious towards the market following significant write-downs in value for existing investments, fund-raising will remain an extremely challenging task in 2009,' the report said.
Fund-raisers have also lowered their targets by $28 billion over the past three months, and in some cases have shelved or abandoned their funds altogether.
So far this year, 36 real estate funds have been abandoned or put on hold, compared with 25 funds in all of 2008, the report said.
Funds focused on Europe represented the biggest group in terms of value raised, with five funds raising a total of $5.3 billion. That's down from 12 funds and $9.2 billion a year earlier.
About 3.1 billion euros ($4.32 billion) of that was attributed to the Blackstone Real Estate Partners Europe III, the largest fund to close so far this year, Preqin said.
Nine funds focused on the United States raised $3.2 billion, paling in comparison to the 31 funds that raised $17.5 billion in the 2008 second quarter.
Two funds focused on Asia and the rest of the world raised $400 million, down from 13 funds and $10.7 billion in the year-earlier quarter, Preqin said.
Meanwhile, Vornado Realty Trust is seeking to raise $1 billion to start a private-equity fund to buy distressed retail and office properties in markets in which they operate, predominately Manhattan and Washington D.C., the Wall Street Journal reported on Tuesday.
Since the start of 2008 private equity real estate returns have taken a big hit, with one-year horizon internal rate of returns down 39.9 percent, the worst performance in the private equity industry.
(1 euro = $1.395)
(Reporting by Ilaina Jonas; Editing by Matt Daily and Richard Chang) Keywords: PRIVATEEQUITY/REALESTATE (ilaina.jonas@thomsonreuters.com; +1 646 223 6193; Reuters Messaging: ilaina.jonas.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, July 7 (Reuters) - Fund-raising by real estate private equity firms reached a 5-year low in the second quarter as investors remained worried about falling values, according to alternative asset research firm Preqin.
Sixteen funds dedicated to real estate investment raised a total of $8.9 billion, the lowest quarterly total since the 2004 third quarter, when 22 private equity real estate funds raised $8 billion, the UK-based firm said in a report released on Tuesday.
'With many investors still unable to commit new capital, and with other investors more cautious towards the market following significant write-downs in value for existing investments, fund-raising will remain an extremely challenging task in 2009,' the report said.
Fund-raisers have also lowered their targets by $28 billion over the past three months, and in some cases have shelved or abandoned their funds altogether.
So far this year, 36 real estate funds have been abandoned or put on hold, compared with 25 funds in all of 2008, the report said.
Funds focused on Europe represented the biggest group in terms of value raised, with five funds raising a total of $5.3 billion. That's down from 12 funds and $9.2 billion a year earlier.
About 3.1 billion euros ($4.32 billion) of that was attributed to the Blackstone Real Estate Partners Europe III, the largest fund to close so far this year, Preqin said.
Nine funds focused on the United States raised $3.2 billion, paling in comparison to the 31 funds that raised $17.5 billion in the 2008 second quarter.
Two funds focused on Asia and the rest of the world raised $400 million, down from 13 funds and $10.7 billion in the year-earlier quarter, Preqin said.
Meanwhile, Vornado Realty Trust is seeking to raise $1 billion to start a private-equity fund to buy distressed retail and office properties in markets in which they operate, predominately Manhattan and Washington D.C., the Wall Street Journal reported on Tuesday.
Since the start of 2008 private equity real estate returns have taken a big hit, with one-year horizon internal rate of returns down 39.9 percent, the worst performance in the private equity industry.
(1 euro = $1.395)
(Reporting by Ilaina Jonas; Editing by Matt Daily and Richard Chang) Keywords: PRIVATEEQUITY/REALESTATE (ilaina.jonas@thomsonreuters.com; +1 646 223 6193; Reuters Messaging: ilaina.jonas.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.