Record ‘dry powder’ for PERE investment will lower performance

Private equity real estateTwo-thirds of private equity-real estate (PERE) firms intend to deploy more capital this year, a survey has indicated. Preqin, a private equity researcher, found almost half of 180 PERE fund managers planned to invest significantly more money in 2017. But valuations were a key concern for fund managers and many have reduced their performance objectives as a result. This is because the industry has a record $250 billion (€237 billion) of “dry powder” (unused capital), which has increased competition for assets and put extra pressure on asset pricing. Just over half of managers surveyed said competition for lower risk assets had increased and 41% ranked opportunistic assets as the most fiercely sought after type of investment. Just under half of the managers with a fund in the market had lowered their performance expectations, Preqin found. Over the last two years, PERE investment activity – which combines debt and equity investments in property – has increased notably, with the aggregate value of deals reaching $242 billion in 2015, and $220 billion last year. ©2017 funds europe

Sponsored Profiles

SPONSORED FEATURE: Alternative thinking

Mar 16, 2017

Portfolio Manager Davide Cataldo discusses the results of the Pioneer Investments’ survey on liquid alternatives and how investors can be encouraged to increase their allocation.

SPONSORED FEATURE: Interest rate risk hedging: Swapping to other options

Mar 16, 2017

Heightened margin requirements for cleared and uncleared OTC derivatives pose a challenge for legitimate hedging activities and are driving financial institutions to explore alternative hedging...

SPONSORED FEATURE: Why blockchain could be the fund industry’s next Ford Model T

Mar 16, 2017

Blockchain aims to radically change the way investors can access funds, says Olivier Portenseigne, Managing Director and Chief Commercial Officer of Fundsquare.

SPONSORED FEATURE: Open architecture: In need of protection

Mar 16, 2017

Greater efficiency must be embraced to ensure regulatory changes do not destroy choice for fund buyers, says Bernard Tancré of Clearstream.

Executive Interviews

INTERVIEW: Finding managers that can (and do)

Apr 18, 2017

Fabrice Kremer, a fund selector at Banque de Luxembourg Investments, has berated fundamental managers for failing to beat indices, but he remains committed to active funds. He speaks to Nick...

JERSEY INTERVIEW: ‘A steady sort of place’

Mar 21, 2017

The chief executive of Jersey Finance is keen to portray the island as a stable, trustworthy jurisdiction. He talks to George Mitton.

Roundtables

ROUNDTABLE: The issue is perception

Mar 21, 2017

Our panel discuss tax transparency, the elegance of private placement and why Jersey could do more to promote itself. Chaired by Tom Cowsill in Saint Helier.

ASSET SERVICING ROUNDTABLE: Under pressure

Mar 07, 2017

Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.