CIC lines up $500m secondaries buy from Harvard

Harvard University is reportedly in advanced talks to sell underlying investments in around six US-focused real estate funds to China sovereign wealth fund, China Investment Corporation.

China Investment Corporation is set to buy $500 million of Harvard’s investments in US-focused real estate funds, it was reported today.

The sovereign wealth fund is in advanced talks to buy half a dozen fund interests, according to the Wall Street Journal.

Should a deal complete, it would be a boost to the secondaries industry, whose predictions of a tidal wave of deals in the aftermath of the credit crunch have failed to materialise.

According to secondaries specialist Landmark Partners, $1.2 billion of trades completed last year. Though up on $855 million in 2008, this was still below market estimated transactional volumes.

In an article published by PERE in June, Chad Alfeld, a partner at Landmark, said: “Our experience has shown us that selling actually occurs on a lag timeframe from the dislocation, so you find not a tidal wave but rather a rising tide of deal activity. He added: “Those that were considering secondary sales last year have not necessarily gone away. They still exist as potential sellers.”

According to the Wall Street Journal, Harvard’s real-estate portfolio suffered a loss of more than 50 percent in the year that ended June 2009. Since 2009, the $26 billion Harvard endowment has been trying to trim its $5.4 billion real-estate portfolio as it seeks to cut its exposure to illiquid assets like real estate.

Morgan Stanley and Credit Suisse Group are reportedly representing Harvard on the sale. The newspaper added that some of Harvard’s largest commitments are with Lubert-Adler, Beacon Capital Partners and Westbrook Partners.

CIC has been targeting real estate during the downturn and was voted Asia Limited Partner of the Year in the 2009 Global PERE Awards.

Recent investments include an $800 million commitment to Morgan Stanley Real Estate Fund VII Global.
Collin Lau, who joined from Starr International, leads CIC’s real estate investment strategy.