Commercial real estate investors are confident they’ll be able to get the cash needed to close deals in 2021, according to a recent poll by an investment management software company.
Among 142 senior leaders of U.S. commercial real estate investment management firms surveyed, 94% told Juniper Square they plan to fundraise this year and expect to do so successfully.
“Folks are feeling generally more optimistic now than they were before about the prospects for private real estate investing,” Juniper Square Senior Vice President of Sales Brandon Sedloff told industry news portal Bisnow. “I think that secondly, there’s a lot more appetite from investors to want to commit capital to private real estate as well.”
About 81% of respondents said they would raise capital largely from new investors. This is in contrast to a fall 2020 poll, when a majority of survey participants said they relied on existing investors.
Senior living and care investment experts have said in recent weeks that existing relationships would remain critical within the industry, particularly as COVID-19 hampers the types of site visits typically needed to attract buyers and sell investors.
Brian Sunday, managing director of AEW Capital Management, said his firm’s overall view on the investment case for senior living hasn’t changed, especially when it comes to working with proven partners on new projects.
“With demographics, and with new developments slowing down amid the pandemic, senior housing has a good long-term view,” Sunday said during a March 10 NIC webinar. “As things open up, we’ll see that confidence come back.”
Bill Pettit, president of The R.D. Merrill Co., agreed, underscoring the need to align interests with potential investors.
Another interesting takeaway from the Juniper Square survey: Commercial real estate leaders — about half of them Juniper customers — said the average capital commitment during their most recent fundraising effort was between $150,000 and $300,000.
“That doesn’t necessarily mean that people are investing less,” Sedloff said. “What it means is that the distribution, the type of investor, is shifting. Where it used to be if that you’re a large institutional manager, the only type of capital that you were able to target is very large check sizes.”