Alternative Investment Fundraising on Pace to Top $100 Billion in 2022
According to the latest report from Robert A. Stanger & Co., non-traded alternative investments are on pace to raise more than $100 billion in 2022, a new record. Non-traded real estate investment trust fundraising is set for the second highest total ever despite a slowdown in monthly fundraising during the fourth quarter.
Year-to-date 2022 alternative investment fundraising totaled $98.7 billion through November, a 38% increase over the same period of 2021, led by non-traded REITs at $32.1 billion (up 8%), non-traded BDCs at $23.0 billion (up 88%), interval funds at $22.3 billion (up 45%), and Delaware statutory trusts at $8.6 billion (up 41%).
The top five fundraisers in the alternative investment space year-to-date are Blackstone ($31.0 billion, primarily in BREIT and BCRED), Blue Owl Capital ($9.9 billion in BDCs and private placements), Cliffwater ($6.6 billion in interval funds), Starwood ($5.3 billion, in SREIT) and Bluerock ($3.9 billion in interval funds, DSTs and private placements).
Despite monthly non-traded REIT fundraising falling to $1.1 billion in November, a 26% decline from October, the space remains on target to surpass $33.0 billion total fundraising for 2022, just behind the highest ever annual fundraising set in 2021 at $34.4 billion.
“Overall fundraising has been driven by strong total returns during the past three years despite downward trends in the last two months,” said Kevin T. Gannon, chairman of Stanger.
NAV REITs experienced another increase in redemptions for the third quarter 2022 and satisfied over $3.6 billion of quarterly redemption requests, equal to approximately 49.2% of fundraising and dividend reinvestment for the same period. Stanger estimates that redemptions for the fourth quarter of 2022 for all NAV REITs will remain elevated at approximately $4.5 billion with Blackstone, Starwood and RREEF reporting they have reached their 5% limit on redemptions.
“The industry is well positioned to meet redemptions up to the 5% quarterly cap with sufficient liquidity sleeves on the balance sheets to fund redemptions without tapping real estate asset sales for 2022 or 2023,” said Gannon.
Stanger’s survey of top sponsors tracks fundraising of all alternative investments offered through the retail pipeline including publicly registered non-traded REITs, non-traded business development companies, interval funds, non-traded preferred stock of traded REITs, Delaware statutory trusts, opportunity zones and other private placement offerings.
Through November, the top 2022 alternative investment sponsors identified by Stanger include Blackstone ($31.0 billion), Blue Owl Capital ($9.9 billion), Cliffwater ($6.6 billion), Starwood ($5.3 billion), Bluerock Capital Markets ($3.9 billion), Apollo Global Management ($3.9 billion), HPS Investment Partners ($3.4 billion), Ares Management ($3.2 billion), Nuveen ($1.6 billion) and FS Investments ($1.6 billion).
Year-to-date non-traded REIT’s have raised $32.1 billion, up from $29.7 billion for the same period of 2021. Blackstone leads 2022 fundraising with $19.0 billion, followed by Starwood Capital with $5.3 billion. FS Investments ($1.5 billion), Ares Real Estate Group ($1.4 billion) and Hines ($977 million) round out the top five fundraisers. J.P. Morgan Real Estate Income Trust, which began fundraising through a private placement earlier in the year, reported its first public fundraising data in November. Apollo Realty Income Solutions, which became effective on June 29, 2022, and PGIM Private Real Estate Fund, which became effective on Aug. 15, 2022, have not reported fundraising yet.
Year-to-date non-traded perpetual-life business development companies have raised $23.0 billion, up from $12.2 billion during the comparable period of 2021. Blackstone leads fundraising with $12.0 billion raised. Blue Owl Capital ($4.5 billion), HPS Investment Partners ($3.4 billion), Apollo Global Management ($2.3 billion), Brookfield/Oaktree ($453 million) and Nuveen Churchill ($264 million escrow break) round out 2022 fundraising.
“Similar to non-traded REITs, the BDC space has experienced a slowdown in monthly fundraising but will end 2022 setting a fundraising record,” said Randy Sweetman, executive managing director of Stanger. “In addition, Angelo Gordon, PGIM (Prudential), Ares, Bain Capital, T. Rowe Price OHA and Fidelity all remain in the pre-effective BDC pipeline.”
Robert A. Stanger & Co., Inc., founded in 1978, is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations, and consolidations.
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