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Non-Traded Alts Fundraising Totaled $7.6 Billion in January; BDCs, Interval Funds Lead the Way

Non-Traded Alts Fundraising Totaled $7.6 Billion in January; BDCs, Interval Funds Lead the Way. Alternative investments, Robert A. Stanger & Co., Stanger, real estate investment trust, Apollo, FS Investments, Blackstone, BREIT, Blue Owl Capital, Delaware statutory trust, business development companies, BDCs, interval funds, fundraising

Alternative investment fundraising totaled $7.6 billion in January, led by non-traded business development companies at an estimated $2.5 billion and interval funds at $1.9 billion. For the month, non-traded real estate investment trusts reported just $317 million of fundraising, as compared to nearly $4.6 billion of fundraising one year ago in January 2023. This included an investment from the Regents of the University of California in Blackstone’s BREIT totaling $4 billion.

Without this investment, January 2024 non-traded REIT fundraising is down 47% as compared to January 2023 fundraising. On the other hand, non-traded BDC monthly fundraising has surpassed $2 billion raised per month since September 2023.

“Retail investors continue to revise their allocation strategy to non-traded BDCs, interval funds, and private placements (including infrastructure funds) due in great part to a generally higher yield on BDCs and interval funds along with a simpler regulatory environment,” said Kevin T. Gannon, chairman of Robert A. Stanger & Co., Inc.

In addition, heightened levels of redemption activity continue. NAV REITs satisfied an estimated $4.6 billion of requests in the fourth quarter of 2023, equal to approximately 4.6% of net asset value at the beginning of the period. Several NAV REITs, such as Starwood’s SREIT and Blackstone’s BREIT, have reported January 2024 redemption requests that have exceeded monthly 2% limits. Stanger expects that the redemption overhang will continue to drag on net fundraising for most of 2024.

“The industry has successfully met redemptions up to the 2% monthly and 5% quarterly caps to date, with sufficient liquidity sleeves and expected proceeds from asset sales to meet redemptions,” said Gannon.

Blackstone led January 2024 fundraising with $145.7 million, followed by FS Investments with $43.4 million. Apollo Global Management ($29.0 million), Nuveen ($18.7 million), and Starwood ($15.2 million) round out the list of top five fundraising sponsors.

Non-traded perpetual-life business development companies raised approximately $2.5 billion in January 2024, led by Blackstone with $944 million raised. Blue Owl Capital with $443.2 million, Apollo Global Management ($402.1 million), HPS Investment Partners ($282.1 million estimated), and Ares Management Corporation ($173.9 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 business development companies, interval funds, non-traded preferred stock of traded REITs, Delaware statutory trusts, opportunity zone, and other private placement offerings. The top fundraisers in the alternative investment space year-to-date are Blackstone ($1.1 billion), Cliffwater ($895 million), Blue Owl Capital ($681 million), Apollo Global Management ($529 million), and Ares Management Corporation ($523 million).

Private placement offerings for public reporting companies continued their upward momentum in fundraising in 2024. In January 2024, private placements (including DST/tenant-in-common properties, qualified opportunity zones, private BDCs and other private placements) raised nearly $2.4 billion. The KKR Infrastructure Conglomerate LLC and KKR Private Equity Conglomerate LLC combined raised $483 million while the private BDC Goldman Sachs Private Credit Corp raised over $333 million.

“We expect this trend in private placement fundraising to continue for the foreseeable future as the products are simpler to construct and appeal to a fairly wide array of retail investors,” according to Randy Sweetman, executive managing director of 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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