Huber Bongolan

Are Private Equity Investors Ready to Step Off the Sidelines?

Read Date: 10/2020

  • U.S. private equity real estate (PERE) funds are still holding record levels of dry powder – $147 billion as of December 2019, according to Preqin
  • H1 2020 was painfully slow for capital raising for global real estate funds –  peak of $83 billion in 2019, and now only $23 billion as of 8/2020
  • H2 2020 is looking light also
  • Starting around August 2020, there has been a gradual shift of investors from defense to offense (aka restarting investment activity)
  • Shifting to offense falls into two different camps: 1. the steady, strategic investors who believe COVID-19 is not going to disappear in the immediate future, but they don’t think a temporary disruption should impact long-term strategic investment plans OR 2. the investors focusing on a “two-minute offense strategy,” meaning they are actively seeking to take advantage of opportunities that have resulted or been accelerated by the downturn
  • Even before COVID-19, capital was flowing to the large PERE funds, such as Blackstone, Brookfield Asset Management and Starwood Capital Group – COVID-19 has further magnified that trend
  • The current fundraising environment is challenging for some of the smaller fund managers so they might JV with larger managers to help stretch their capital 
  • M&A activity among fund managers might come back – it was big in 2017 and 2018 and dropped off a bit in 2019

Published by CredibleCRE

Huber Bongolan has 9 years of experience in commercial and residential real estate finance. Mr. Bongolan has sourced $700+ million in debt and equity financing for land, construction, bridge, and permanent deals in all product types. Huber received a double bachelors, Business Economics and International Studies, from UC Irvine where he graduated Cum Laude. He then earned a double masters, MBA and MRED, with Program Distinctions, from University of Southern California. Mr. Bongolan is an Eagle Scout in the Boy Scouts of America, and holds leadership positions in both ULI (Urban Land Institute) and FIIRE (Filipinos in Institutional Real Estate). He enjoys competitive sports, mentoring youth, and teaching personal finance. Huber also enjoys writing about Real Estate trending topics and education. His blog posts can be found on https://medium.com/@huber_60971

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