Home ListingSeptember 5, 2014

Where Are the Best Private Real Estate Funds?

Want top-quality private real estate? Head to the coast.

Reported by Featured Author

Research by Preqin into private real estate funds has identified the top-performing firms around the world—and the list is dominated by California.

Of the top 10 companies, five are based in California. Carmel Partners and Embarcadero Capital Partners both achieved the top ranking, with each group seeing all three of their funds recording top-quartile performance. JBG Companies, based in Maryland, and Centennial Holdings, with its headquarters in Georgia, also had a 100% record of top-quartile funds, Preqin found.

In total, the research covered 126 firms and 729 funds. Only five of the top 25 firms in Preqin’s league table were based outside the US: HDFC Property Ventures (Mumbai, India), Gaw Capital Partners (Hong Kong), CITIC Capital (Hong Kong), CapMan Real Estate (Helsinki, Finland), and Sveafastigheter (Stockholm, Sweden).

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Each fund was compared to other portfolios launched in the same year and with similar geographic focuses. Preqin excluded funds launched in 2012 or later, firms which had fewer than three funds, passive products, and firms that had not launched new products since 2008.

Meanwhile, a survey of investors by Preqin in August found almost 30% were planning to allocate more capital to private real estate in the next 12 months, compared with 18% of those surveyed in December 2013.

Of those investors, Preqin found that 90% were planning to allocate to two or more products—with 20% targeting five funds or more—while 20% had set aside in excess of $300 million of fresh capital for the asset class.

The firm’s research also highlighted a correlation between strong fund performance and the likelihood of that performance being repeated in subsequent fund launches. The research found that 34% of product launches that followed a top-quartile fund also achieved top-quartile performance, while 42% of launches that followed a bottom-quartile fund also ranked in the bottom quartile. Preqin published similar research into private equity funds earlier this year.