Capital watch: Slow capital raising market trickles down to debt funds

Just 21 funds were raised in the first three quarters of 2023, compared with 51 for full year 2022.

Managers raising capital for North America-focused commercial real estate debt funds closed 21 funds totaling about 11.83 billion through the end of the third quarter of 2023, according to data from Real Estate Capital USA. By comparison, there were 51 debt funds totaling $25.01 billion closed during 2023.

Despite the slowdown, there were several substantial funds closed through the first three quarters of 2023, including a $3 billion offering from Toronto-based Brookfield Asset Management, Brookfield Real Estate Finance Fund VI, and similar-sized funds from Nashville-based AllianceBernstein and Los Angeles-based PIMCO.

The slower fundraising market is reflected in New York-based capital advisory firm Hodes Weill’s 2023 Real Estate Allocations Monitor. The report found institutional investor allocations to commercial real estate remained steady in 2023, marking the first time in 10 years that these levels did not rise.