Non-traded real estate investment trusts raised $1.2 billion in November and are on pace to raise a total of $11 billion in 2019, according to investment bank Robert A. Stanger & Co. The November 2019 total is almost three times the previous year’s total of $415 million. Year-to-date fundraising of $9.98 billion is up 147 percent over the same period 2018 total of $4.04 billion.
Stanger said that the entrance of institutional asset managers into the non-traded REIT market has transformed the industry and will continue to fuel fundraising. “As retail investors seek to diversify in the light of market uncertainty, they now have access to real estate funds managed by the same well-regarded firms that institutional investors turn to,” noted Stanger.
“Stanger is now projecting that non-traded REITs will raise more than $11 billion in 2019, up from our prior estimate of $10.5 billion, and will close out the year with their highest fundraising total since 2014,” said Kevin Gannon, chairman and chief executive officer of Stanger.
NAV REITs (perpetual entities that offer limited periodic liquidity at net asset value) have raised $9.2 billion in 2019 through November, up 196 percent from the same period of 2018. Lifecycle REITs (entities anticipating a five to seven year holding cycle followed by a liquidity event) contributed $770 million, down 17 percent from the same period last year.
Blackstone continues to lead capital formation in 2019, raising more than $7.3 billion through November, and Starwood Capital is also gaining traction with $762 million year to date. Other year-to-date top fundraisers include Black Creek ($419 million), Hines Interests ($372 million), and LaSalle Investment Management ($358 million).
Stanger’s survey of top sponsors of alternative investments revealed more than $23.1 billion in funds were raised through November 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, opportunity zone and private placement offerings. Stanger estimates that fundraising will exceed $25 billion across these alternative investments in 2019, up more than 96 percent from 2018 levels.
The top alternative investment sponsors identified by Stanger are Blackstone Group ($7.4 billion), Griffin Capital ($1.8 billion), Bluerock Capital ($1.3 billion), Inland Real Estate ($933 million), Owl Rock Capital ($882 million), Starwood Capital ($762 million), Black Creek Group ($605 million), Hines Interest ($546 million), Bridge Investment Group ($509 million), LaSalle Investment Management ($358 millions), CION Investment ($332 million), Broadstone Real Estate ($320 million), and Passco ($315 million).
Alternative investment sponsors continue to offer new ways for investors to allocate capital to income-oriented real estate and investments that are not directly correlated to the public equity markets. The emergence of NAV REITs, an expanding presence in the interval fund market, and the introduction of opportunity zone funds are all examples.
“Stanger expects this innovation will continue to fuel alternative investment fundraising,” concluded Gannon.
Robert A. Stanger & Co, founded in 1978, is a nationally recognized 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.
Stanger is also known for its flagship publication, The Stanger Report, a newsletter focused on direct participation program and non-traded REIT investing; The Stanger Market Pulse, focused on public DPP, non-traded REIT and non-traded BDC sales; The IPA/Stanger Monitor, focusing on non-traded REIT performance, The Stanger Interval Fund Report, focusing on non-traded interval fund investing, and The Stanger Digest, a newsletter providing a weekly update on industry activities.