Fundraising for alternative assets offered to retail investors reached $47.56 billion year-to-date through May, according to a report from Robert A. Stanger & Co. The sum already makes up more than half of the $76.2 billion in alternative fundraising achieved in 2023 and puts asset managers on pace to match or exceed 2022’s total of $104.8 billion. Stanger estimates that the alternative investment space will raise more than $110 billion of new capital in 2024.
Asset managers are on a record pace despite a notable dropoff in fundraising on non-traded REITs, which peaked in 2022. Fundraising for non-traded REITs year-to-date totaled $2.66 billion, indicating these vehicles were still struggling to catch up to full-year fundraising in 2023 ($10.22 billion) and 2022 ($33.2 billion). The slowdown in the segment is largely driven by broader issues that have plagued commercial real estate over the past two years, pushing interest toward other asset classes.
Non-traded BDCs, meanwhile, accounted for the highest share of that overall volume in the first five months of 2023, with fundraising totaling $14.88 billion through May. Interval funds followed at $11.39 billion, and various types of private placements, including investments in infrastructure and private equity, at $8.71 billion.
At the same time, private placement REIT fundraising reached $1.62 billion year to date through May, above their full-year total of $1.4 billion in 2023. (Private placement REITs are exempt from SEC registration and their shares do not trade on national stock exchanges, unlike publicly-listed REITs or non-traded REITs).
“We think [fundraising] this year will be up from where it was last year overall, but it’s flowing more toward private placements and more toward BDCs and interval funds, which generally have somewhat higher total returns,” said Kevin T. Gannon, chairman of Robert A. Stanger. “The yields on these other alternative securities are higher, they are pushing 10s, while non-traded REITs are push 5s and 6s.”
Gannon expects to see about $25 billion in fundraising each for BDCs and interval funds in 2024, while non-traded REITs and private placement REITs will likely reach $10 billion in fundraising.
The top fundraisers in the alternative investment space year-to-date, according to Stanger, are Blackstone ($8.3 billion), Cliffwater ($5.6 billion), Blue Owl Capital ($4.1 billion), Ares Management Corporation ($4.0 billion) and Kohlberg Kravis Roberts & Co. ($3.8 billion).
Private equity giant Blackstone ranked top in fundraising in the non-traded BDC and non-traded REIT categories year-to-date through May, with $4.7 billion and $904 million, respectively. The firm represented over 30% of the market share in both segments.
Other top fundraising sponsors in the non-traded BDC space included Blue Owl Capital, with $2.88 billion and 19.4% market share, and Apollo Global Management, with $2.39 billion and 16.1% market share.
In the non-traded REIT category, runners-up to Blackstone included Ares Management Corp., with $642 million and 24.1% market share, and LaSalle Investment Management, with $214 million and 8.1% market share.