Large CRE Funds - Whose Got the Money?

Within the large CRE investment funds, there are basically three types: public REITs, registered but untraded REITs - the so-called private REITs, and private equity funds. We have seen for some time the ability of private REITs to amass capital. For example, a large private REIT we know focused on medical acquisitions has consistently raised $2-$3 million a day and another focused on retail is raising $3-$4 million a day. Contrast this with private equity firms, who have had their relative struggles raising money in this environment.

Two years ago, there seemed to be a prediction on private REITs as well - this article from Global Real Estate Monitor in April 2008 predicted substantial growth in private REITs. Of course, there's always exceptions to the rule, as Inland's recent inability to raise substantial cash demonstrates (they raised just $67 million from August 2009 through March 2010).

But it seems the time may be ripe to tap the public markets. According to CoStar, "there have been more than 90 filings by REITs since March 1 announcing more than $10 billion in new fund raising activity and seeking to raise more than $50 billion."  This filing activity was highlighted by the largest secondary offering ever, which was done by Macerich Co., raising $1.23 billion in a filing that closed in early April.

So who has the money? Everyone, it seems. Even at a relatively slow fundraising pace, the PE firms still raised nearly $10 billion last quarter. So capital will be, and is being, deployed into the CRE market. Now we just have to wait for the flood gates to open on bad CMBS loans.