The total amount of funds raised from investors for real estate acquisitions continues to dwindle. Companies and funds reported raising $30.28 billion from investors in the third quarter of 2012 for commercial real estate
-related deals and refinancings. That amount is approximatelt 9% less than in the second quarter, and a significant 33% lower than the first quarter when $44.88 billion was raised.
CoStar Group tracks the fundraising activity of thousands of entities on an ongoing basis and adds about 125 new entities per month.
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Of the money raised in the third quarter, more than $17.9 billion was targeted primarily for investments and acquisitions. The remainder was primarily targeted for repaying debt.
Of that amount targeted for new investments, an estimated $12.6 billion was earmarked for property-related investments, the remainder for debt, mortgage or securities purchases.
Of the total amount raised in the third quarter, $23.7 billion was from publicly offered shares in REITs and real estate operating companies.
The other $6.5 billion raised in the third quarter came from private fund-raising efforts. This was a huge drop off from the $19.4 billion raised in the second quarter as more, smaller private investors competed in the market for funds.
In the third quarter, a total of 449 private real estate-related entities reported raising $14.5 million on average. By contrast in the second quarter, just 333 funds were active in the market raising nearly $53 million on average.
The largest bulk of funds raised in the third quarter (an estimated 27%) was earmarked primarily for retail investments. Debt and securities was the second most targeted investment type at 17%. Funds targeting multifamily, health care and office investments raised about 13% each of the total; lodging and industrial property investment made up 8% each of targeted investments.
Only two sponsoring firms raised more than $1 billion in the third quarter, compared to eight in the second quarter.
Health Care REIT Inc. in Toledo, OH, completed two public common stock offerings in the quarter raising $2.45 billion. In August, the REIT agreed to acquire Sunrise Senior Living through a merger. When that merger closes Health Care REIT will have acquired $3.2 billion in senior housing properties.
American Realty Capital Partners-sponsored funds raised $1.63 billion in the third quarter, with the bulk of that coming from American Realty Capital Trust III Inc. (ARCT III). Late last month, ARCT III closed its fund raising following the successful achievement of its target equity raise of $1.7 billion from the start of the year.
From Aug. 21 through Sept. 21, ARCT III acquired 91 single-tenant, freestanding properties with 700,000 leasable square feet in 19 states, at an aggregate purchase price of $111.7 million. The acquisitions increased the portfolio's size, at cost, to $846.6 million, comprised of 326 properties. Its portfolio pipeline includes $404.0 million of acquisitions under contract.
Other Notable Fund Raisings
Almanac Realty Investors LLC committed to invest $100 million in RAIT Financial Trust. The capital will be used to fund RAIT's expanding loan origination and investment activities, including CMBS and bridge lending.
The Bascom Group closed its first fully discretionary real estate investment fund. The fund, Bascom Value Added Apartment Investors LLC, has up to $185 million of buying power, with leverage, for value added multifamily acquisitions across an 11-state region. To date the fund has acquired three multifamily roperties: Veranda Apartments in Fullerton, CA - 128 units; Hyland Park in Denver, CO - 492 units; and Coldwater Springs in Phoenix, AZ - 301 units.
Vulcan Investment Partners, which was founded by a group of leading Mexican businessmen, will invest $150 million on purchasing 1,200 repossessed and foreclosed homes in South Florida. Vulcan administers Vulcan Dynamic Realty Fund LP, a fund dedicated to purchasing and renovating distressed properties at 50% of their original construction cost.
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