Key Takeaways
- • Robert A. Stanger & Co. raised its 2024 retail alternative fundraising forecast to $120 billion, up from $115 billion, driven by exceptional performance in business development companies, interval funds, and private REITs.
- • Non-traded BDCs have raised $29.3 billion year-to-date through October 2024, representing an 82% increase versus the same period in 2023, with average dividend yields of 10.6% attracting retail capital.
- • Blackstone and Blue Owl Capital collectively control 49.7% of the BDC fundraising market, underscoring significant concentration among institutional managers in the retail alternatives space.
- • Interval funds reached $22.9 billion in fundraising through October (13.4% increase from full-year 2023), while private REITs surged 143% year-to-date to $3.9 billion, signaling broad-based demand for illiquid alternative vehicles.
- • Non-traded REIT redemptions declined 43% quarter-over-quarter in Q3 2024, suggesting improved investor confidence and reduced liquidity pressure in this product category.
Summary
Robert A. Stanger & Co., a prominent investment banking firm specializing in alternative investments, elevated its 2024 retail alternative fundraising projection to $120 billion from an earlier estimate of $115 billion. The upward revision reflects unexpectedly robust capital formation across multiple alternative asset classes, particularly business development companies, which have emerged as the dominant growth driver for the year.
Year-to-date through October 2024, non-traded BDCs achieved $29.3 billion in fundraising, representing an 82% increase compared to the equivalent 2023 period. According to Kevin T. Gannon, chairman of Stanger, investors have committed $36 billion into BDCs overall and $9 billion into public and private REITs as of the reporting date. The pronounced appeal of BDCs to retail investors stems largely from their attractive dividend distributions, which average approximately 10.6%—a material yield premium relative to broader equity markets. The fundraising landscape remains highly concentrated, with Blackstone and Blue Owl Capital commanding a combined 49.7% market share in the non-traded BDC channel.
Supporting the overall forecast revision, interval funds generated $22.9 billion in capital through October, reflecting a 13.4% increase from full-year 2023 totals. Private REITs demonstrated exceptional momentum, posting $3.9 billion in year-to-date fundraising—a 143% increase versus 2023. Private BDCs also contributed meaningfully, raising $6.8 billion, equivalent to a 99.5% year-over-year increase.
Non-traded REITs, by contrast, experienced a 47% decline in fundraising to $5 billion year-to-date. However, this weakness was partially offset by a significant improvement in redemption dynamics. Stanger data indicates that third-quarter redemptions for non-traded net asset value REITs fell 43% quarter-over-quarter and 21% year-over-year, suggesting reduced investor anxiety and improved confidence in the stability of these vehicles' net asset values and distribution capabilities.
Year-to-date through October 2024, non-traded BDCs achieved $29.3 billion in fundraising, representing an 82% increase compared to the equivalent 2023 period. According to Kevin T. Gannon, chairman of Stanger, investors have committed $36 billion into BDCs overall and $9 billion into public and private REITs as of the reporting date. The pronounced appeal of BDCs to retail investors stems largely from their attractive dividend distributions, which average approximately 10.6%—a material yield premium relative to broader equity markets. The fundraising landscape remains highly concentrated, with Blackstone and Blue Owl Capital commanding a combined 49.7% market share in the non-traded BDC channel.
Supporting the overall forecast revision, interval funds generated $22.9 billion in capital through October, reflecting a 13.4% increase from full-year 2023 totals. Private REITs demonstrated exceptional momentum, posting $3.9 billion in year-to-date fundraising—a 143% increase versus 2023. Private BDCs also contributed meaningfully, raising $6.8 billion, equivalent to a 99.5% year-over-year increase.
Non-traded REITs, by contrast, experienced a 47% decline in fundraising to $5 billion year-to-date. However, this weakness was partially offset by a significant improvement in redemption dynamics. Stanger data indicates that third-quarter redemptions for non-traded net asset value REITs fell 43% quarter-over-quarter and 21% year-over-year, suggesting reduced investor anxiety and improved confidence in the stability of these vehicles' net asset values and distribution capabilities.
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