How Fundraising Has Adapted Through the Pandemic

Eufemia Didonato

Like many aspects of the commercial real estate investment market, investment capital raising has changed dramatically as a result of the pandemic and social distancing requirements. The standards, like Zoom calls and virtual tools have all helped fund managers find ways to continue to operate and work with investors through […]

Like many aspects of the commercial real estate investment market, investment capital raising has changed dramatically as a result of the pandemic and social distancing requirements. The standards, like Zoom calls and virtual tools have all helped fund managers find ways to continue to operate and work with investors through the pandemic—and these tools have helped investors get comfortable placing capital without physically tours or in-person meetings. Still, the capital raise process looks very different today than it did at the start of the year.

“Overall, the fundraising market is very different post-pandemic. Zoom calls have, of course, taken the place of in-person meetings. It is challenging for investors to underwrite a new manager over Zoom,” Khalif Edwards, managing director and head of capital raising and investor relations at Cityview, tells GlobeSt.com. “But we continue to have Zoom calls with investors to provide our thoughts on the market, hear what is important to them and discuss possible opportunities we might see coming out of this.”

In terms of asset classes, most investors are open to placing capital for multifamily and industrial assets, which have performed the best through the pandemic. “There is a general theme that multifamily and industrial remain at the top of their lists,” says Edwards. “There is also some interest in niche strategies such as data centers and life sciences. Even though there is still market uncertainty, investors understand the importance of vintage year diversification and capital will get invested in 2020.”

Investors have gotten comfortable in this new environment, but most have placed capital in funds with existing relationships and partners, rather than new relationships or funds. For investors willing to forge new relationships, the barrier is higher. “A lot of that capital will be directed towards existing managers that have a demonstrated track record, especially one of investing through a downturn,” says Edwards. “That’s not to say investors won’t invest in new relationships, but many of those conversations started pre-COVID and a certain level of comfort was developed. You can get deals across the finish line with Zoom and conference calls, but it will be challenging to get commitments from any new conversations post-COVID.”

 

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