Non-Traded REIT Equity Raise Showing Signs of Fatigue but Remains on Record Setting Annual Pace
Stanger Robert A. Stanger & Co. Inc., a boutique investment banking firm that provides financial advisory services, released an update on REITs fundraising for the first nine months of 2022.
Robert A. Stanger & Co. Inc., a boutique investment banking firm that provides financial advisory and other services focused on the non-traded alternative investment industry, released an update on fundraising for the first nine months of 2022.
“While non-traded REITs have made cumulative gains year to date, the monthly run rate shows signs of fatigue from a higher interest rate environment, and flattening to declining real estate pricing,” said Kevin T. Gannon, chairman of Stanger. “Based on current fundraising levels we are lowering our 2022 projections of $35 billion for non-traded REITs to $31.5 billion, $25 billion for non-traded BDCs to $22.5 billion, and our overall fundraising projection for all alternatives Stanger covers from $120 billion to $108 billion.”
Year-to-date 2022 alternative investment fundraising totaled $84.9 billion through September, a 47% increase over the same period of 2021, led by non-traded REITs at $27.6 billion (up 12%), non-traded BDCs at $20.3 billion (up 101%), interval funds at $19.7 billion (up 52%), and Delaware Statutory Trusts at $7.6 billion (up 75%). The top three fundraisers in the alternative investment space year to date are Blackstone ($26.4 billion, primarily in BREIT and BCRED), Blue Owl Capital ($8.9 billion in BDCs and private placements), and Cliffwater ($5.7 billion in interval funds).
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 zones, and other private placement offerings. Through September, top 2022 alternative investment sponsors identified by Stanger are Blackstone ($26.4 billion), Blue Owl Capital ($8.9 billion), Cliffwater LLC ($5.7 billion), Starwood Capital ($4.4 billion), Apollo Global Management ($3.6 billion), Bluerock Capital ($3.4 billion), HPS Investment Partners ($3.2 billion), Ares Management ($2.8 billion), Nuveen ($1.5 billion), and FS Investments ($1.4 billion).
Year-to-date non-traded REIT’s have raised $27.6 billion, up from $24.7 billion for the same period of 2021. Blackstone leads 2022 fundraising with $16.2 billion, followed by Starwood Capital with $4.4 billion. FS Investments ($1.3 billion), Ares Real Estate Group ($1.3 billion), and Hines ($880 million) round out the top five fundraisers. Newly effective Apollo Realty Income Solutions (which launched on June 29, 2022), J.P. Morgan Real Estate Income (July 7, 2022), and PGIM Private Real Estate Fund (Aug. 15, 2022) have not yet reported fundraising.
Year-to-date non-traded perpetual-life business development companies have raised $20.3 billion, up from $10.1 billion during the comparable period of 2021. Blackstone leads fundraising with $10.2 billion raised. Blue Owl Capital ($4.1 billion), HPS Investment Partners ($3.2 billion), Apollo Global Management ($2.2 billion), Brookfield/Oaktree ($380 million), and Nuveen Churchill ($264 million escrow break) round out 2022 fundraising.
“The non-traded BDC space continues its staggering rate of capital formation, up 101% from this time last year,” according to Randy Sweetman, executive managing director of Stanger. “Nuveen Churchill broke escrow in August, while Ares, Bain Capital, and T. Rowe Price OHA were recently joined by Fidelity in the pre-effective pipeline.”
Stanger provides financial advisory services in connection with identification, evaluation and execution of alternatives, including M&A transactions, capital formation, joint ventures, securities structuring, and fairness opinions. Stanger also assists companies in the structuring of public and private investment funds and the creation of securities distribution capabilities.
