Capital raising by opportunistic real estate funds globally fell sharply during the first half of 2009, as institutional investors became far more risk adverse and fund managers turned away from emerging property markets in particular, according to the latest research from Clerestory Capital Partners.
Capital raising by opportunistic real estate funds globally fell sharply during the first half of 2009, as institutional investors became far more risk adverse and fund managers turned away from emerging property markets in particular, according to the latest research from Clerestory Capital Partners.
Joanne Douvas, co-founder and managing principal at Clerestory, a New York-based real estate investment manager, said: 'New opportunistic funds have notably shifted away from targeting growth in emerging markets. Fund managers are instead seeking to take advantage of the apparent distress in mature markets where they believe they can achieve better returns with less risk.
'Although the opportunities are maturing, we believe it is still early to be raising capital, or to be investing,' Douvas said.
Only 11 small-cap (SC) opportunistic funds and two large-cap (LC) opportunistic funds reached fund closure by the end of the second quarter, presenting a total of $4 bn (EUR 2.7 bn) in equity. This was 56% down from the fourth quarter of 2008, although due to variations in the dataset and timing of the data collection this is indicative of the broad trend rather than being strictly statistically comparable.
Many of these funds had started their capital raising process during the first part of 2008 and Clerestory can only identify a handful of opportunistic funds that have reached a first close since the Lehman Brothers collapse in September last year.
Clerestory defines SC-opportunistic funds as those raising less than $1 bn of equity and LC-opportunistic as those raising more than $1 bn.
