CBRE: Asian deals ‘harder to complete’

CBRE Global Multi Manager has completed just two real estate secondaries deals in Asia this year, according to Singapore-based managing director Adrian Baker.

CBRE Global Multi Manager is continually in search of real estate secondaries opportunities in Asia but has slowed its pace recently, according to Adrian Baker, a managing director in the firm’s Singapore office.

The firm usually completes between 12 and 15 real estate secondaries deals each year, but has only closed two deals in 2014.

Adrian Baker
Adrian Baker

“We [have] started to see the market become much harder to complete transactions since the beginning of last year,” Baker said.

CBREGMM was the most active on the secondaries market between 2009 and 2013, when it bought stakes in 2005- through 2007-vintage opportunity funds that ware substantially invested before or during the global financial crisis. The assets in those funds lost value through 2009, allowing CBREGMM to buy the stakes for significant discounts at the bottom of the cycle, Baker explained.

“We knew it was a limited window of opportunity to buy those types of secondaries.”

CBREGMM targets investments in developed markets of Asia Pacific with a limited exposure to emerging markets such as China and Vietnam, according to its website. The firm invests in funds that focus on all property types including office, logistics and industrial, shopping centres, hotel and residential.

However, he said too many of the fund interests were selling at inflated prices now, as liquidity has significantly increased.

“The best opportunities were when the market was very illiquid,” Baker said adding that many of today’s targeted funds are approaching the end of their life, so the ability to generate sufficient equity multiples is challenging. 

CBREGMM doesn’t expect the Asian markets to turn around for real estate secondaries and opportunities will be limited going forward.

“The liquidity and lack of secondaries deal flow means there will be fewer and fewer deals next year. I don’t think the real estate secondaries market will catch up in Asia, but it continues with large volumes in other parts of the world,” Baker said.

For now, CBREGMM will focus on primary, joint venture, club and co-investment real estate investments.

CBREGMM is part of CBRE Global Investors which has $92.8 billion of assets under management and manages six real estate investment programmes, according to its website. Aside from global multi manager, other strategies include value-added, opportunistic and debt.