Given current financial markets, just where does private equity stand on the residential homebuilding development sector? Pausing slightly, but likely ready to roll again soon, answered a panel on private equity investment, which featured Michael Blum, CIO of Kettler; Jennifer Glover, managing director of portfolio and investments for MacFarlane Partners; and Samuel Hill, managing director and regional manager for Calyon Corporate and Investment Bank.
"There are 400 real estate development funds still seeking to raise capital," Glover said. "So it might be more realistic to expect a $750 million fund, rather than a $1 billion fund" coming from private equity sources in today's environment.
The panel suggested that developers seeking private equity should be ready to document a successful track record while being willing to accept greater loss ratios. They also emphasized pitching a niche strategy to investors. "Aggressive private equity money is still chasing lifestyle-focused real estate," Blum said. "While everyone is holding their breath to see how [current market conditions] will impact the flow of money, I have not seen that happening yet."