Non-Traded Alts on Pace to Raise $70 Billion in 2023 Says Stanger

Year-to-date 2023 non-traded alternative investment fundraising totaled nearly $64 billion through November, according to the latest research provided by investment bank Robert A. Stanger & Co. Inc.

Non-traded business development companies lead the way at $17.9 billion, interval funds follow at $17.3 billion and non-traded real estate investment trusts lag behind at $9.8 billion.

According to Kevin T. Gannon, Stanger’s chairman, “While retail investors continue to shift investments away from non- traded REITs to interval funds, BDCs and private placements, redemption activity in NAV REITs remained elevated at $4.6 billion for the third quarter. NAV REITs have met nearly $14 billion of redemption requests year-to-date through September and should be praised for their commitment to providing liquidity to investors at levels never seen before.”

Non-Traded REIT redemptions held steady for the third quarter of 2023 and NAV REITs satisfied over $4.6 billion of quarterly redemption requests, equal to approximately 4.4% of the prior quarter industry aggregate NAV. Stanger estimates that redemptions for the fourth quarter of 2023 for all NAV REITs will remain elevated at approximately $4.5 billion with several NAV REITs such as Blackstone, Starwood and Cantor Fitzgerald reporting they have reached their 2% monthly limit on redemptions for November. Gannon stated, “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.”

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 five fundraisers in the alternative investment space year-to-date through the end of November are Blackstone ($12.4 billion), Blue Owl Capital ($6.9 billion), Cliffwater ($6.9 billion), Kohlberg Kravis Roberts & Co. ($4.0 billion) and Ares Management Corporation ($3.4 billion). “The aggregate reported NAV for all NAV REITs has contracted to $96 billion for November. This is a 12% decline from the peak of nearly $110 billion in January 2023.” according to Randy Sweetman, executive managing director of Robert A. Stanger & Co. Inc.

The alternative investments tracked by Stanger raised $18.4 billion in the most recent three-month period led by non-traded BDCs and interval funds. Private placements continue to gain traction in fundraising including the KKR Infrastructure Conglomerate LLC and KKR Private Equity Conglomerate LLC that have raised approximately $3.7 billion year-to-date through November.

Year-to-date non-traded REIT’s have raised approximately $9.8 billion. Blackstone leads 2023 fundraising with $6.3 billion (inclusive of a $4.5 billion University of California investment), followed by FS Investments with $703.6 million, LaSalle Investment Management ($510.3 million), Ares ($505.2 million) and Apollo ($401.5 million).

Year-to-date non-traded perpetual-life business development companies have raised approximately $17.9 billion, led by Blackstone with $6.2 billion raised. Blue Owl with $3.9 billion, Apollo ($2.0 billion), Ares ($1.5 billion) and HPS Investment Partners ($1.4 million through October) round out the list of top 5 fundraising sponsors.

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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