1

The future is bright…

The global real estate debt fund market has seen a substantial expansion over the past decade, with more than $300 billion raised, according to data from Real Estate Capital USA. The US market has seen capital raising steadily climb since 2008, reaching a high point of $42.72 billion in 2017 and seeing a total of $132.1 billion raised by all of the participants in the Real Estate Capital USA Debt Fund 40 over the past five years. The expectation is this number will continue to rise as more investors carve out debt allocations.

2

…And green

Green lending, which is moving into the mainstream in the European commercial real estate market, is expected to become a critical differentiator as managers seek to expand their platforms. More institutional and individual investors are asking for ESG principles to be a greater part of the US commercial real estate lending market. A key factor in this change will also stem from a Securities and Exchange Commission proposal that would mandate public companies report the climate-related risks of their businesses.

3
Size varies

The size of the managers in the REC USA Debt Fund 40 varies substantially, with AXA IM Alts topping the charts at just over $13 billion in real estate debt raised over the past five years, followed by PGIM Real Estate at $8.3 billion. The top 10 managers all have raised more than $5 billion over the past five years, with the next 10 in the range of $2 billion to $4 billion. Look for these numbers to rise in the coming years as more institutional investors turn toward debt strategies.

4

The global story is strong

The 50 largest global debt fund managers raised an aggregate of $224 billion over the ranking period, according to data from affiliate publication PERE. This is an 18 percent increase from the same period last year and 20 percent higher than 2020. All of this points to a capital markets space with strong momentum.

5

Strong first quarter

The first quarter of 2022 is already proving to be strong for debt strategies, with data from PERE showing this segment of the market made up 34 percent of all capital raised during that period. Four of the five largest funds closed in the first quarter were focused on mezzanine and other debt investments, a trend expected to continue as more institutions allocate capital to the sector.