Harvard Management Company (HMC) has put roughly $1 billion-worth of real estate fund interests up for sale as it continues to push into direct real estate investing and wind down its legacy portfolio, Secondaries Investor has learned.
Cogent Partners has been hired to sell the portfolio of LP stakes, according to two sources familiar with the matter.
The secondaries advisory firm has worked with HMC in the past and it’s understood that its new parent, Greenhill & Co, has also worked with HMC’s real estate portfolio.
HMC and Cogent both declined to comment.
It was unclear at press time which specific fund stakes were up for sale. Real estate fund managers HMC has repeatedly invested with include Composition Capital Partners, Gaw Capital Partners, Iron Point Real Estate Partners and Ludert-Adler Partners, according to PEI’s Research and Analytics division.
HMC, which manages Harvard University’s endowment and related financial assets, has a 12 percent allocation to real estate this year. Its portfolio of real estate funds is valued at about $2.6 billion, according to PEI data.
HMC has boosted its activity in direct real estate investments recently. The endowment was not active in direct investing before 2010, but the strategy now accounts for more than one-third of its total property holdings, which was estimated at roughly $4.8 billion, according to its annual report for the fiscal year ended 30 June 2014.
The annual report noted the new strategy was “working very well” as its direct real estate investments generated a 20.4 percent return for the fiscal year. Meanwhile, its ‘real estate strategic funds’ portfolio generated a 16 percent return and its legacy real estate portfolio returned 7.8 percent. The legacy portfolio is “in run-off mode”, according to the annual report.
The endowment fund had about $36.4 billion of assets under management as of September 2014.