Capital distributions to private real estate fund investors reached an all-time high in 2013, with a total of $138bn returned to investors as a result of managers selling assets, more than double the amount in any year previously, according to a survey conducted by Prequin.
This is more than double the $67bn distributed to investors throughout 2012.
With capital distributions increasing, many investors are able to re-invest previously tied up capital into new funds, further bolstering the private real estate fundraising market.
As such, Preqin’s recent investor survey revealed that institutional commitments to the asset class increased over the last year, with 52% of investors surveyed in July 2014 stating they had committed to real estate funds in the previous 12 months, more than any other period since December 2009.
- 2013 also saw capital distributions exceed the amount invested in real estate, with $92bn of equity deployed by private fund managers in real estate assets.
- 2012 saw the highest level of capital called by private real estate managers in any single year, with $130bn in capital called from investors over the year. This narrowly surpassed the $129bn called in 2007.
- With distributions increasing and investors therefore able to access previously tied-up capital, 82% of real estate fund managers believe investor appetite for private real estate investment has increased in the last 12 months.
- However, investors are becoming increasingly demanding regarding information on investments and performance, and as a result 38% of real estate firms will be increasing their investor relations team over the next 12 months.
- 55% of active institutional investors will be investing $100mn or more in private real estate in the coming year, up from 40% of investors surveyed a year ago.
- Fund managers remain confident there are attractive opportunities in real estate; 63% expect to invest more capital in the next 12 months than they did in the past year, and just 14% expect to invest less.
Andrew Moylan, head of real assets products, said: "The increase in valuations in many real estate markets around the world, and improving confidence leading to a good supply of potential buyers, has enabled fund managers to realize many of their investments. 2013 was a record year in terms of distributions to investors and the first year since 2003 in which the amount of capital distributed to limited partners exceeded the amount of capital called up to make new investments. As a result, these institutional investors have more capital available to reinvest in real estate funds, and many plan to place large amounts into private real estate funds in the coming year."