The private equity real estate market has enjoyed a steady resurgence from the infamous crisis in 2008. McKinsey and Company’s Global Private Markets Review 2024: Private markets in a slower era report notes that “For real estate, 2023 was a year of transition, characterized by a litany of new and familiar challenges. Pandemic-driven demand issues continued, while elevated financing costs, expanding cap rates, and valuation uncertainty weighed on commercial real estate deal volumes, fundraising, and investment performance”.

The strong opportunities in this investment space have been complemented by higher levels of competition for the best investments. Capital has shifted away from core and core-plus strategies creating opportunities for investors to focus on capital appreciation according to McKinsey & Company’s report. Private equity real estate investors, facing these unique competitive challenges, are now under pressure to identify and close the best deals quickly, and the market realities make a quick close unlikely. The McKinsey & Company report stated that real estate underperformed for the first time since 2009, which impedes these firms’ ability to hit their fundraising target and improve overall market share. When competition is this fierce and fund closing times are prolonged, firms often alternate tactics for fundraising. These strategies include raising funds deal-by-deal or finding methods to expedite the fund-by-fund fundraising process.

Asset management systems produced by industry-specific technology vendors provide real estate investment firms with opportunities to streamline both a deal-by-deal and fund-by-fund fundraising strategy. An online investor portal facilitates efficient deal-by-deal fundraising by posting deal opportunity information to investors who fit the ideal profile for the opportunity. These profiles are generated through the collective correspondence and activity logged into your firm’s CRM system. Once you have identified these preferences, they can be entered into configured fields, and leveraged into customized email lists distributed through a Mail Merge Wizard into the portal. The capability to instantly notify qualified investors about enticing investment opportunities also enhance the brand equity of the firm, conveying deep attention to investors’ interests.

Fundraising on a fund-by-fund basis can be optimized by adopting a robust internal communication platform, by effectively determining marketing traction, and maintaining a steady flow of information through constant reporting. An asset management system enables users to assign specific responsibilities for different elements of the fundraising pipeline, ensuring accountability for the status of fund-by-fund marketing initiatives. The system can also assign stages for investor interest and a level that aligns with the firm’s internal terminology and display the anticipated amount of investment. These fields can be grouped into a report that can be immediately distributed to all related team members, ensuring total visibility on a fund-level fundraising effort.

Accessibility is important for any type of fundraising strategy, and consequently a mobile app is essential for private equity real estate fundraising teams. As noted in Dynamo Software’s Fundraising for Mobile Applications white paper, complementary mobile apps for investment management platforms ensure that fundraising teams can meet ad hoc fundraising challenges. It keeps everyone in the firm informed on developments occurring during road trips and allows access to the complete data library of portfolio performance and investor interactions on demand from a tablet or smartphone.

The McKinsey & Company report’s “Real Estate Recedes” section poses the question, what should firms focus on to overcome the hurdles in this year of transition? Trusting your internal workforce, and investing in technology to assist with their performance, is not only cost-effective, but enables firms to tailor their strategies to the evolving nature of private equity real estate.

 

Dynamo Software gives alternatives investors a Performance Edge, empowering them to efficiently scale their firm to capitalize on the growing wave of private market opportunities. With the Dynamo Alternative Investment Platform, Limited and General Partners can now run a tightly integrated firm, putting all their data to work to accelerate operations across front, middle, and back office, unleashing teams to work smarter, and allowing leaders to make better investment decisions and scale their firm. Dynamo has a global footprint with operations across North America, EMEA, APAC, and UAE. Follow Dynamo on LinkedIn.

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