Investment banking firm Robert A. Stanger & Co. has moved its projection for alternative investment fundraising in the retail channel for the full year 2024 from $115 billion to $120 billion. The change was driven primarily by a strong flow of funds into business development companies, interval funds and private REITs.
“Investors have already committed a staggering $36 billion into BDCs and $9 billion into public and private REITs this year,” said Kevin T. Gannon, chairman of Robert A. Stanger & Co., in a statement.
Year-to-date through October, effective and currently offered non-traded BDCs raised approximately $29.3 billion, an 82% increase compared to the same time in 2023. According to Stanger analysts, one reason for these vehicles’ popularity with retail investors is their high dividend levels, which average about 10.6%. Just two firms—Blackstone and Blue Owl Capital—are currently responsible for a 49.7% market share of fundraising in this channel.
During the same time period, fundraising for interval funds reached over $22.9 billion, an increase of 13.4% from the full-year 2023 total.
Private REITs experienced a fundraising boost of 143% year-to-date through October compared to 2023 totals, to $3.9 billion.
Private BDCs also performed strongly, with $6.8 billion in fundraising so far in 2024—a 99.5% increase from their total fundraising volume last year.
While fundraising for non-traded REITs, at $5 billion, declined by 47% year over year, they have seen a significant reduction in redemption requests. Stanger estimates that in the third quarter, redemptions for non-traded NAV REITs were down 43% quarter over quarter and 21% year over year.
“We are starting to see a reduction in the NAV REIT redemption queues that built up over the last two years, particularly with Blackstone’s BREIT satisfying all investor requests and returning $1.7 billion to investors in the third quarter as compared to the $3 billion per quarter going back to the third quarter of 2022,” according to Gannon’s statement.
Stanger bases its figures on a survey of top sponsors in the alternative investment space that tracks fundraising for all alternative products offered through the retail channel.
