Raising Capital Gets Tougher for Real-Estate Funds

As property values hit a plateau, big investors are becoming more selective about where they put their money

By Peter Grant

The amount of capital raised by real-estate private-equity funds plummeted in the fourth quarter of 2019 in a sign that investors are struggling to find high-yielding deals after years of soaring prices.

Only $18 billion of real-estate funds closed during the quarter, the smallest amount for a three-month period since the first quarter of 2013, according to data firm Preqin. By comparison, the total was $47 billion in the third quarter of 2019 and $35 billion in the fourth quarter of 2018, Preqin said.

Analysts caution against putting too much weight on one quarter’s results. Fund closings often take place in bursts, they note.  —more—

The Leela Palace hotel in India was purchased by Brookfield’s largest-ever property fund. As investors become more selective about private-equity managers, the biggest funds are benefiting. PHOTO: LEELA PALACES HOTELS & RESORTS