In our second annual CRE capital-raising survey, we asked CRE executives about their fundraising performance in 2021 as well as their capital-raising plans for the months ahead. Nearly 80 senior leaders from a cross-section of U.S.-based firms responded. Although the firms they lead differ in size, the types of properties they invest in, and the investment vehicles they use, almost all agree on one thing—2022 is shaping up to be a solid year for raising CRE capital.
Read on to find out more about survey respondents’ outlook for the year ahead and how they plan to raise more capital from more investors in 2022.
Record fundraising year
Although fundraising was muted across the industry during the first half of 2021, most survey respondents took advantage of a second-half rebound in fundraising volume to end the year on a strong note.
A majority of respondents (78%) reported that they raised capital in 2021, and the average capital commitment was up 80%, from $125,000 to $225,000.
Competition heats up
In addition to raising more capital, respondents are busy deploying it. On average, respondents reported they own or invest in 25 properties, with 73% saying that number has increased over the past three years.
Similarly, a majority (65%) say they’ve been doing more deals over that same time period, completing an average of 13 deals in 2021.
As the number of deals completed rises, so too does the competition to get new deals done. Although liquidity remained available for most asset types, locations, and risk profiles, 77% of respondents reported that the competition to find good deals is getting stiffer.
Fundraising technology users continue to outperform
Most respondents relied on a CRM, offering data rooms, or digital subscription management tools—or a mix of all three—to connect with investors and raise capital. It’s making a difference—of the firms that raised more capital in 2021, 77% used technology versus just 20% of non-tech users.
Digital fundraising tools also helped to increase fundraising efficiency. Although the average year-over-year fundraising cycle remained constant at 22 weeks from first call to final close, fundraising without technology was far more difficult. On average it took non-tech users 88% longer to raise capital in 2021.
Regardless of firm size or investment vehicle used, subscription management tools were particularly important in helping to drive fundraising success. Year over year, users of Juniper Square’s Digital Subscriptions solution saw a 71% increase in the average number of investor positions and a 22% increase in average check size.
One of the firms that enjoyed fundraising success was ApexOne Investment Partners. Their goal was to raise $100 million for their most recent fund. Instead, they raised $355 million in just 10 months—three times their goal in half the time they expected.
Partner and Executive Managing Director Ernest Johnson credits Juniper Square and Digital Subscriptions for driving their success. “Hats off to Juniper Square because we probably couldn’t have done it otherwise,” he said. “The facilitation that Juniper Square provides us to get communications out about new deals and keep investors informed has been critical to our success.”
Juniper Square customers plan to raise more in 2022
Nearly all respondents (95%) plan to raise capital this year, and, on average, they’re looking to raise just shy of $100 million. A majority of respondents expect the average capital commitment per investor will remain around $225,000 in 2022, with around 30% responding that they plan to target average commitments between $150,000 and $300,000.
But Juniper Square customers are confident they can do better. Their average planned raise in 2022 is more than $145M. That’s 35% more than those using other tech solutions and 60% more than those not using any technology at all—and 94% more than respondents in last year’s survey.
Respondents aim to raise a majority of investors from new investors
Similar to last year, existing investors fueled fundraising activity. Although 73% of capital raised in 2021 came from existing investors, most sponsors (68.5%) say they’re looking to raise capital primarily from new individual and institutional investors in their next capital raise—and they plan on referrals from existing investors to attract them.
Growth levers differ
A majority of respondents say they’re prioritizing raising more capital over raising it more quickly. While most firms are expecting to raise more capital in 2022, a closer look reveals firms are leaning into different levers to drive growth. Juniper Square customers are far more likely to prioritize bringing in larger investors than non-customers (68% versus 49%), while non-tech users are more likely to be focused on improving economics.
More CRE firms consider outsourcing fundraising tasks
As competition heats up and investors expect more, survey respondents are looking for ways to increase their fundraising effectiveness. To achieve their fundraising goals, more respondents are considering outsourcing fundraising functions—especially tedious tasks like creating and managing data rooms—so they can focus on the most critical aspects of raising and deploying capital and growing their investor relationships.
Our Operational Excellence Survey looked at commonalities shared by the fastest-growing CRE firms and found that top-performing CRE firms are less likely to be slowed down by inefficient processes. In addition to saving time, outsourcing key fundraising tasks to trusted third-party experts leaves GPs better positioned to focus on providing more responsive service and more transparent reporting, both key elements highly valued by investors.
That focus will be important in the months ahead, especially for GPs looking to their existing investor base to refer them to new investors. Our investment operations and administration survey found that focusing on the investor experience pays off, resulting in more repeat business (86%), more referrals (83%), more—and larger—investment commitments (62%), more time to spend on high-value activities (55%), and more productive customer relationships (44%).