News & Press
Analysis: Higher Rate Cycle Dragging Downcapital Formation, Deployment
Excerpted from the article published by PERE Credit
Fundraising for all real estate private equity has been declining since 2021, when the market hit a peak of $258.7 billion. By comparison, there was $238.4 billion raised in 2022 and $179.1 billion raised last year. Despite the decline in fundraising, there is what is believed to be a record amount of dry powder sitting on the sidelines.
Higher interest rates are making it harder for deals to pencil and for managers to achieve their targeted returns, said Rob Gilman, a partner and leader of New York-based consultancy Anchin’s real estate group. “We are seeing managers who are finding it difficult to raise a second fund when client capital from the previous fund has not yet been deployed,” Gilman added.