According to recent articles in The Wall Street Journal, U.S. private equity funds are on pace through the first three quarters of 2013 for their best fund-raising year since 2008. Through the first three quarters of 2013, private equity funds have raised a total of $164.6 billion, a 22% increase from 2012.
Real Estate Private Equity Funds See Major Increase
Of particular interest for the South Florida real estate market, real estate private equity funds have raised $39 billion through the first three quarters of 2013, a 56% increase from 2012. This improved fund-raising is likely the result of increased liquidity with the existing investments of private equity funds, who have taken advantage of improving markets through dividend recapitalizations, initial and secondary public offerings and other exits.
Despite this increased liquidity with existing investments, private equity funds are still sitting on substantial dry-powder and unrealized value with their existing investments, including numerous investments bought five or more years ago. As an example, at the end of 2012, real estate private equity firms were holding investments with an unrealized value of $256 billion. This combination of private equity funds having available capital to invest and at the same time looking to liquidate and dispose of long-held investments should lead to increased deal-making going forward.