Harvard shops $1.5bn RE portfolio – exclusive

The manager of the US's biggest university endowment has returned to market with a diversified portfolio of stakes, Secondaries Investor has learned.

Harvard Management Company (HMC), which manages the US’s largest university endowment, has returned to market with a portfolio of diversified real estate fund stakes in an attempt to reduce its exposure to the asset class, Secondaries Investor has learned.

HMC, which manages around $36 billion in assets, initiated the process to offload the stakes around March and has hired Greenhill Cogent to work on the sales process, according to four sources familiar with the deal.

Two of the sources said the portfolio was worth north of $1.5 billion, while one of the sources said it was worth north of $1 billion.

The portfolio contains at least 50 fund stakes which are diversified by strategy, regional focus and vintage, according to two of the sources. The deal is in the early stages and first round bids have not been submitted yet.

Secondaries Investor understands that HMC’s moves are being driven by chief investment officer Rick Slocum, who took up the newly-created post in March.

One of the sources said HMC is open to selling the whole portfolio to a single buyer as well as selling smaller portions to separate buyers.

According to PERE data, HMC’s largest real estate fund commitment is a $200 million investment in Westbrook Real Estate Fund IX, a 2011-vintage $1.6 billion vehicle focusing on a value-added strategy and managed by New York-headquartered Westbrook Partners.

The endowment has previously tapped the secondaries market – in 2015 HMC brought a portfolio of real estate fund stakes to market worth around $1 billion and hired Cogent Partners, now Greenhill Cogent, to advise on the sale. Only about half of that portfolio ended up trading, as Secondaries Investor reported.

HMC had a target allocation of 14.5 percent of its portfolio to real estate during the 12 months to 30 June 2016, according to the endowment’s most recent annual report.

In January the endowment announced it was planning to spin out its direct real estate team to become an external manager by the end of the year, as part of changes that involve cutting its staff by half and adopting a more generalist investment approach.

HMC and Greenhill Cogent declined to comment.