Third quarter 2018 fundraising hits high mark

After a slight drop last year, fundraising activity is back in high gear this year. During the third quarter 2018, 32 private equity real estate funds recorded final closings, raising a total of $36.2 billion, according to Institutional Real Estate, Inc.’s FundTracker database. While technically not a record amount for a third-quarter fundraising volume — $36.6 billion was raised in third quarter 2008 — there’s a strong possibility the third quarter 2018 total will increase in the coming weeks as a few more fund closings are reported — and then the new record will be official.

Pairing the healthy third-quarter total with the highest first-quarter volume on record — $34.5 billion — helps bring the year-to-date total to $97.7 billion, a figure that is well positioned to push the annual total to the highest mark since the global financial crisis. While 2018 may not challenge the all-time fundraising record of $134.9 billion set in 2008, it is sure to surpass the current post-GFC record of $110.5 billion established in 2015. And it will represent a substantial increase from last year’s total of $97.6 billion.

The third-quarter 2018 fundraising total of $36.2 billion is nearly double the amount raised in third quarter 2017 ($18.5 billion), and it represents the highest quarterly volume since the above-mentioned third-quarter 2008 figure of $36.6 billion. However, it is substantially below the all-time quarterly record of $57.2 billion set in second quarter 2008.

The large number of mega-funds closed during the third quarter elevated the average fund size to $1.1 billion. With 25 of the 101 funds closing year-to-date in 2018 qualifying as mega-funds, the average fund size is a whopping $967 million, much higher than the 2017 and 2016 averages of $668 million and $653 million, respectively.

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