Robert A. Stanger & Company has reported that sales of non-traded REITs totaled $869 million in May. Year-to-date fundraising of $3.6 billion is more than double the same period 2018 total of $1.7 billion.
Fundraising has continued to climb each quarter after hitting a low of $794 million in the third quarter of 2017, and according to Stanger chairman and CEO Kevin Gannon, the firm remains very bullish on non-traded REIT capital formation.
“Stanger projects that non-traded REITs will raise more than $7 billion in 2019, up from $4.6 billion in 2018.” said Gannon.
NAV REITs (perpetual entities that offer limited periodic liquidity at net asset value) accounted for more than $3.1 billion of sales during the first five months of 2019, up 142 percent from the same period of 2018 when NAV REITs raised $1.3 billion.
Traditional lifecycle REITs (entities anticipating a five- to seven-year holding cycle followed by a liquidity event) contributed $455 million during the first five months of the year, an approximately 14 percent gain over the same period of 2018 when sales topped $400 million.
Private equity giant The Blackstone Group (NYSE: BX) continues to lead capital formation, raising $2.5 billion during the first five months of 2019. Starwood Capital came in second with $219 million, followed by Black Creek Group ($217 million), Hines Interests ($159 million), and Jones Lang LaSalle ($119 million). All other sponsors raised a total of $392 million combined.
Stanger’s survey of top sponsors of alternative investments revealed that nearly $7.6 billion was raised through May via the retail pipeline. Alternative investments included in the survey are publicly-registered non-traded REITs, non-traded business development companies, interval funds, non-traded preferred stock of traded REITs, as well as Delaware statutory trusts, and private placement offerings.
Stanger estimates that fundraising will exceed $16 billion across these alternative investments, up 24 percent over 2018 levels.
The top alternative investment sponsors identified by Stanger are: Blackstone ($2.5 billion), Griffin Capital ($840 million), Bluerock Capital ($583 million), Inland Real Estate ($386 million), Owl Rock Capital ($372 million), Black Creek Group ($271 million), Hines Interest ($239 million), Starwood Capital ($219 million), and SmartStop Asset Management ($147 million).
Stanger attributes the growth in capital formation by alternative investments sponsors to the “strong desire by retail and institutional investors to allocate capital to income-oriented real estate and investments that are not directly correlated to the public equity markets while investing under the direction of well-regarded institutional asset managers.”
Gannon expects this trend to continue for the foreseeable future.
Robert A. Stanger & Co. is an investment banking firm specializing in providing strategic planning, 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. Stanger’s publications include The Stanger Report, a newsletter focused on direct participation programs and non-traded REIT investing; The Stanger Market Pulse, focused on public DPP, non-traded REIT and BDC sales; The Stanger Interval Fund Report, focused on non-traded interval fund investing, and the Stanger Digest, a newsletter providing a weekly update on industry activities.