Global real estate private equity fundraising totals slumped in 2022 as investors became more risk-averse amid high inflation and interest rates.
As of Dec. 6, aggregate real estate private equity fundraising for the year stood at $160.60 billion, more than 24% lower than the capital raised for all of 2021, according to Preqin Pro data.
The number of funds closed in 2022 dipped 41.3% to 345 from 588 vehicles the previous year.
In the fourth quarter through Dec. 6, global real estate private equity funds raised $43.23 billion, down 46.7% from the $81.14 billion raised during the full fourth quarter of the previous year. The number of funds also plunged to 48 from 181 vehicles closed in the last three months of 2021.
Joseph Rubin, a consultant at Eisner Advisory Group LLC, said the aggressive interest rate hikes implemented by the U.S. Federal Reserve to quell soaring inflation have shaken the real estate market and made cash flows and returns more uncertain and riskier.
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"Private equity funds' hunts for new deals have been particularly challenging — it's hard to price up front and it's even harder to price the exit. [I]t's also hard to find financing that makes the deal work, given the onset of negative leverage and lenders' growing cautiousness," Rubin said in a blog post.
Top 10 closed funds
Brookfield Strategic Real Estate Partners IV LP, an opportunistic fund managed by Brookfield Asset Management Inc., was the largest real estate private equity fund closed this year with $17 billion in capital commitments. The vehicle seeks to invest primarily in North America, according to Preqin Pro data.
TPG Capital LP's TPG Real Estate Partners IV LP came in second, with a fund size of $6.80 billion.
Largest funds in the market
Blackstone Inc.'s Blackstone Real Estate Partners X LP is the largest real estate private equity fund in the market with a target of $30 billion. The vehicle already made a close in July with $24.1 billion in commitments, The Wall Street Journal reported, citing a regulatory filing.
Meanwhile, Starwood Capital Group Management LLC seeks to raise $18 billion for its Starwood Real Estate Income Trust.
