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Pandemic cuts capital raising for non-listed vehicles: INREV

Global real estate investment managers raised at least €123 billion of new capital for non-listed real estate in 2020. However, according to the Capital Raising Survey 2021, total capital raised in 2020 fell relative to the record high of €196 billion reached in 2019.

This was largely a consequence of the pandemic. Nearly a third of managers said they hadn’t raised any new capital in 2020, according to the report, which is published by INREV and its Asia Pacific and North American counterparts, ANREV and NCREIF. Many cited a lack of available product as the main reason.

The number of vehicles raising capital also dropped year-on-year from a record 982 in 2019 to 699 in 2020.

Despite this slowdown on average the capital raised by individual vehicles was higher than in 2019 except for those with a North American regional strategy. The average capital raised for each vehicle with a global strategy was €0.8 billion compared to €0.5 billion in 2019.  

Similarly, investment activity remained robust with 52%% of capital raised in 2020 already deployed. Furthermore, 76% of investment managers expect an increase in capital raising activity over the next two years.

€51 bn raised for European strategies

A total of €51 billion was raised for European strategies in 2020, with non-listed funds again featuring prominently, attracting 39% of all new capital raised in the region. Separate accounts were the second most important target vehicle, securing 23% of the new equity.

Non-listed debt products accounted for the largest increase in capital raised for European strategies, jumping from 4.6% in 2019 to 19% in 2020, with a strong preference for senior debt. This continued interest in debt products from institutional investors complements the report’s findings of a strong focus on core strategies – be it debt or equity non-listed real estate. Together, these data echo general investor preferences for lower risk strategies expressed in the 2021 Investment Intentions Survey. 

INREV CEO Lonneke Löwik

“The fall in the level of capital raised in 2020 compared with the record-breaking achievement of 2019, obviously reflects the impacts of Covid-19.  Not all capital has been invested and there is less investible product available,” INREV CEO Lonneke Löwik said. “However, this research also highlights a clear sign of continuing strong investor appetite for non-listed real estate, a positive outlook on future capital raising activity among investment managers, and a general expectation that new products will emerge.”