Private placement fund formation has slowed in the wake of COVID-19, reported AI Insights in its most recent report.
Eight new private placements were added to AI Insights’ coverage in May, roughly half of the monthly level the firm has seen on average over the past few years. The first few months of 2020 were strong but with the slowdown in May, AI Insights is now flat in terms of new funds added to coverage year-over-year and down modestly in aggregate target raise.
The slowdown was most visible in the 1031 category, where only four new funds were added to AI Insights’ coverage in May compared to well over double-digit additions for the past several years. This may be partially due to a slowdown in real estate transactions overall as well as a lack of confidence in valuations. Also, fewer highly appreciated properties are being sold right now, which reduces the demand for 1031 exchange,s at least in the near-term. The consensus in the industry is that demand will
