Early numbers are in for real estate investment funds closing in second quarter 2018 — and they show a first half well ahead of 2017. While first half 2018 is still tracking behind that of 2015, we might be looking at an up year.
Funds reaching a final close in second quarter 2018 raised a total of $25.4 billion compared to $33.3 billion raised during second quarter 2017, according to Institutional Real Estate FundTracker. However, when we add in amounts closed in the first quarter each year, we have a brighter picture. Total first half capital closed YTD 2018 comes to $59.7 billion. This compares favorably to the $51.1 billion and $55.5 billion raised in first half 2017 and 2016, respectively.
Mega-funds — those funds raising $1 billion or more — accounted for just a bit more of the total in 2018 than they have in previous years. So far this year, mega-funds represent 62 percent of the capital raised. In the previous years, they accounted for 61 percent, 53 percent and 60 percent of the first half totals for 2015, 2016 and 2017, respectively.
For years now, we have been hearing that 2019 will be a recession year. Now that 2019 is just around the corner, the drumbeat of warnings is getting louder. That might make some people wonder if this is a good time to commit capital to a fund. Actually, this is probably the best time to commit. Those funds that had lots of dry powder ready to invest during the last recession made out very well. Stockpiling that powder now, so you can buy when prices are low, seems to be a very prudent way to go.
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