Home Alts News Non-Traded REIT Fundraising Continues to Slow While Redemptions Rise

Non-Traded REIT Fundraising Continues to Slow While Redemptions Rise

Monthly NAV REIT fundraising has fallen to $1.4 billion, a 32% decline from fundraising in September.

Robert A. Stanger & Co., a boutique investment bank that specializes in non-traded alternative investments, revealed in its most recent monthly report that fundraising among non-traded REITs has continued to decline, while redemptions continue to accelerate.

According to Stanger, year-to-date 2022 alternative Investment fundraising totaled $92.8 billion through October, a 45% increase over the same period of 2021, led by non-traded REITs at $30.5 billion (up 15%), non-traded BDCs at $22.2 billion (up 114%), interval funds at $21.3 billion (up 39%), and Delaware Statutory Trusts at $8.1 billion (up 59%). The top three fundraisers in the alternative investment space year to date, are Blackstone ($30.2 billion, primarily in BREIT and BCRED), Blue Owl Capital ($9.5 billion in BDCs and private placements) and Cliffwater ($6.1 billion in interval funds).

However, monthly NAV REIT fundraising fell to $1.4 billion in October, a 32% decline compared to September, putting the space on target for a $33.3 billion total for 2022. Notably, redemptions among non-traded REITs in October nearly equaled 50% of monthly fundraising.

“Monthly fundraising has been declining throughout the year as the Fed has pushed up interest rates,” said to Kevin T. Gannon, chairman of Stanger. “The current monthly run rate is being met by substantial levels of redemptions. For the most recent quarter, redemptions approximated 50% of fundraising. Stanger expects this trend to continue through at least the first quarter of 2023.”

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. Through October, top 2022 alternative investment sponsors identified by Stanger are Blackstone ($30.2 billion), Blue Owl Capital ($9.5 billion), Cliffwater LLC ($6.1 billion), Starwood Capital ($4.6 billion), Apollo Global Management ($3.7 billion), Bluerock Capital ($3.6 billion), HPS Investment Partners ($3.3 billion), Ares Management ($3.0 billion), Nuveen ($1.5 billion) and FS Investments ($1.5 billion).

Year-to-date non-traded REIT’s have raised $30.5 billion, up from $26.6 billion for the same period of 2021. Blackstone leads 2022 fundraising with $18.5 billion, followed by Starwood Capital with $4.6 billion. FS Investments ($1.4 billion), Ares Real Estate Group ($1.3 billion), and Hines ($930 million) round out the top five fundraisers. J.P. Morgan Real Estate Income Trust reported its first fundraising data in October. Newly effective Apollo Realty Income Solutions (6/29) and PGIM Private Real Estate Fund (8/15) have not yet reported fundraising.

Year-to-date non-traded perpetual-life business development companies have raised $22.2 billion, up from $10.4 billion during the comparable period of 2021. Blackstone leads fundraising with $11.7 billion raised. Blue Owl Capital ($4.3 billion), HPS Investment Partners ($3.3 billion), Apollo Global Management ($2.2 billion), Brookfield/Oaktree ($417 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 114% from this time last year,” said Randy Sweetman, executive managing director of Stanger. “In addition, Angelo Gordon and PGIM (Prudential) have just joined Ares, Bain Capital, T. Rowe Price OHA and Fidelity in the pre-effective 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.

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