Alternative Investments Fundraising Totals $37.9 Billion Through April, Led by BDCs and Interval Funds

Alternative investments fundraising totaled nearly $37.9 billion through April led by non-traded business development companies at an estimated $11.6 billion, interval funds at $8.8 billion and other private placements, including infrastructure and private equity offerings, at $7.5 billion, according to the latest data reported by investment bank Robert A. Stanger & Co.

Non-traded BDC fundraising is up nearly 169% as compared to this time last year while interval fund fundraising is up nearly 59%, respectively. As retail investors seek alternatives generating high yields in 2024, they continue to hit the redemption button on their positions in non-traded real estate investment trusts. Redemptions for the first quarter of 2024 surpassed $4 billion for the sixth quarter in a row and several net asset value REITs reported reaching their redemption limits in April.

“April redemption requests for Starwood’s SREIT were reported to be in excess of the 2% monthly limitation and just 37% of requests were satisfied. Similarly, KKR’s KREST saw its Q2 2024 tender offer receive repurchase requests in excess of the 5% quarterly limit and just 48% of requests were fulfilled,” said Kevin T. Gannon, chairman of Stanger.

Non-traded REITs reported $2.2 billion of fundraising year-to-date, with $758 million of that being raised in April alone. While non-traded REIT fundraising experienced a 35% increase in month-over-month results, a closer look under the hood reveals that nearly $396 million of April fundraising came from Delaware statutory trust UPREIT transactions by Ares Industrial Real Estate Income Trust and Ares Real Estate Income Trust.

Without these UPREIT events and others by JLL this year, 2024 non-traded REIT fundraising is down 37% as compared to the same period last year (excluding a $4.5 billion investment from the Regents of the University of California in Blackstone’s BREIT in 2023). Blackstone leads fundraising through April with $666.8 million. It is followed by Ares Management Corporation ($635.9 million), LaSalle Investment Management ($205.1 million), FS Investments ($17.2 million), and Apollo Global Management ($141.1 million) to round out the list of top five fundraising sponsors.

Non-traded BDCs raised approximately $11.6 billion year-to-date through April, led by Blackstone with $3.5 billion raised. Blue Owl Capital ($2.2 billion), Apollo Global Management ($1.8 billion), HPS Investment Partners ($1.3 billion estimated), and Ares Management Corporation ($1.1 million) round out the list of top five fundraising sponsors.

Stanger’s survey of top sponsors tracks fundraising of all alternative investments offered via the retail pipeline including publicly registered non-traded REITs, non-traded BDCs, interval funds, non-traded preferred stock of traded REITs, DSTs, opportunity zones, and other private placement offerings. The top fundraisers in the alternative investments space year-to-date are Blackstone ($6.5 billion), Cliffwater ($4.3 billion), Ares Management Corporation ($3.4 billion), Blue Owl Capital ($3.3 billion), and Kohlberg Kravis Roberts & Co. ($3.2 billion).

“Stanger estimates that the alternative investment space will raise more than $110 billion of new capital in 2024,” said Gannon.

Private placement offerings of NAV REITs, BDCs, infrastructure and private equity investments continue to gain traction in 2024. Last week, two NAV REITs – Ares Industrial Real Estate Income Trust Inc. and Ares Real Estate Income Trust Inc. – announced plans to close their public stock offerings with the intent to pursue perpetual private offerings. Year-to-date through April, other private placements raised approximately $7.5 billion and private BDCs raised nearly $2.6 billion. The newly effective private equity offering by Blackstone, the Blackstone Private Equity Strategies Fund, has raised nearly $2.3 billion while KKR Infrastructure Conglomerate LLC and KKR Private Equity Conglomerate LLC combined raised almost $3.1 billion.

“While there are downward trends in public non-traded REIT fundraising, we are seeing investment managers in this space evolving their product focus and creatively designing different investment strategies that are bringing in new capital and recapturing investor redemptions as well,” said Randy Sweetman, executive managing director at Stanger.

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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