Alts Fundraising Tops $76 Billion for Year, led by BDCs; Non-Traded REITs’ Capital Raise Still Down 52%

Alternative Investment fundraising among largely illiquid offerings totaled approximately $76.6 billion through August led by non-traded business development companies at an estimated $23.7 billion, interval funds at $18.3 billion and other private placements, including infrastructure and private equity offerings, at $12.9 billion, according to investment banking firm Robert A. Stanger & Co., Inc. Non-traded BDC fundraising is up nearly 111% as compared to this time last year while non-traded real estate investment trust fundraising is down 52%, respectively. The industry continues to transform as investors shift their portfolio allocations to private placement offerings, infrastructure, private equity, and higher yielding credit focused investments.

According to past reporting by The DI Wire, Stanger increased its estimate of capital formation in alternative investments by retail investors from $110 to $115 billion in July 2024. Now the firm is anticipating dollar totals to top that estimate.

“Fundraising in alternative investments through August has already surpassed the total raised in 2023, and we anticipate capital formation to exceed $115 billion dollars in 2024 as retail investors continue to seek alternatives generating higher yields,” said Kevin T. Gannon, chairman of Stanger.

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 stocks, Delaware statutory trusts, opportunity zone funds, private BDCs, private REITs and other private placement offerings. The top fundraisers in the alternative investment space year-to-date are Blackstone ($11.9 billion), Cliffwater ($8.8 billion), Blue Owl Capital ($7.1 billion), Ares Management Corporation ($6.5 billion), and Kohlberg Kravis Roberts & Co. ($6.2 billion).

Public non-traded REITs reported nearly $4.2 billion of fundraising year-to-date with $386 million being raised in August. Blackstone leads fundraising year-to-date with nearly $1.4 billion, followed by Ares Management Corporation with $1 billion, Apollo Global Management ($311.9 million), FS Investments ($302.1 million), and LaSalle Investment Management ($279.5 million) rounding out the list of top five fundraising sponsors. Stanger expects that fundraising in public non-traded REITs will remain muted for the remainder of year as private placement REITs gain in popularity. As previously reported, Ares Management closed both of their public NAV REIT offerings and commenced fundraising in perpetual private placement offerings of the REITs in August. The initial closing of Ares’ private offerings is expected to be reported next month and will add to the nearly $3.1 billion raised year-to-date by private REITs.

Non-traded BDCs raised approximately $23.7 billion year-to-date through August, led by Blackstone with $7.3 billion raised. Blue Owl Capital with $4.6 billion, Apollo Global Management ($3.7 billion), Ares Management Corporation ($2.4 billion), and HPS Investment Partners ($2.3 billion estimated) round out the list of top five fundraising sponsors.

“Non-traded BDC offerings continue to attract new entrants to the space with Alliance Bernstein being the latest to launch a public business development company in August,” said Randy Sweetman, executive managing director of Stanger.

Private placement offerings of NAV REITs, BDCs, and infrastructure and private equity investments continue to gain traction in 2024. Year-to-date through August, other private placements raised approximately $12.9 billion and private BDCs raised $5.4 billion. Kohlberg Kravis Roberts & Co. leads in overall private placement fundraising year-to-date with nearly $6 billion, followed by Blackstone with $3.3 billion, Blue Owl ($2.5 billion), Ares Management Corporation ($2.1 billion) and Goldman Sachs ($1.9 billion).

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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