Robert A. Stanger & Co. reported that 2022 non-traded alternative investment fundraising totaled a record $104 billion, a 23% increase over 2021.
The increase was led by non-traded real estate investment trusts at $33 billion (down 3%), non-traded business development companies at $24 billion (up 67%), interval funds at $24 billion (up 25%), and Delaware statutory trusts at $9 billion (up 27%).
The top five fundraisers during 2022 were Blackstone ($31.8 billion, primarily via Blackstone REIT and their BDC, Blackstone Private Credit Fund), Blue Owl Capital ($10.8 billion in BDCs and private placements), Cliffwater ($7.0 billion in interval funds), Starwood ($5.4 billion, in SREIT) and Apollo ($4.1 billion, in NAV REITs, BDCs and interval funds).
Despite monthly non-traded REIT fundraising hitting a low for the year of $1.1 billion in November, fundraising totaled $33.2 billion in 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 fourth quarter,” said Kevin T. Gannon, chairman of Stanger.
NAV REITs experienced another increase in redemption requests during fourth quarter 2022 and satisfied an estimated $4.7 billion of requests for the quarter, equal to approximately 4.3% of net asset value at the beginning of the quarter. Stanger estimates that redemptions for the first quarter of 2023 for all NAV REITs will remain elevated.
“The industry successfully met redemptions up to the 5% quarterly cap with sufficient liquidity sleeves on the balance sheets to fund redemptions without tapping real estate asset sales in 2022, and we expect to see the same in 2023,” said Gannon.
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 business development companies, interval funds, non-traded preferred stock of traded REITs, Delaware statutory trusts, opportunity zone funds and other private placement offerings. The top 2022 alternative investment sponsors identified by Stanger are Blackstone ($31.8 billion), Blue Owl Capital ($10.8 billion), Cliffwater ($7.0 billion), Starwood ($5.4 billion), Apollo Global Management ($4.1 billion), Bluerock Capital Markets ($4.0 billion), HPS Investment Partners ($3.5 billion), Ares Management ($3.4 billion), FS Investments ($1.7 billion) and Nuveen ($1.6 billion).
In 2022, non-traded REITs raised $33.3 billion, down from $34.4 billion for the same period of 2021. Blackstone led 2022 fundraising with $19.4 billion, followed by Starwood Capital with $5.4 billion. Ares Real Estate Group ($1.6 billion), FS Investments ($1.6 billion), and Hines ($1.0 billion) round out the top five fundraisers. Apollo Realty Income Solutions, which became effective midyear, reported its first public fundraising data in December. PGIM Private Real Estate Fund (effective 8/15) has not yet reported fundraising.
Non-traded perpetual-life business development companies raised $23.8 billion in 2022, up from $14.3 billion in 2021. Blackstone led fundraising with $12.4 billion raised. Blue Owl Capital ($4.8 billion), HPS Investment Partners ($3.5 billion), Apollo Global Management ($2.3 billion), and Brookfield/Oaktree ($510 million) round out the top five in 2022 fundraising.
“Similar to non-traded REITs, the BDC space has experienced a slowdown in monthly fundraising but ends 2022 setting a fundraising record,” said Randy Sweetman, executive managing director of Stanger. “In addition, 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.