Landmark, Metropolitan buyers in Harvard RE sale

The two deals were worth almost $2bn combined and comprise the largest secondaries transaction in the asset class this year.

Landmark Partners and Metropolitan Real Estate Equity Management have emerged as buyers of real estate assets totalling almost $2 billion from Harvard Management Company, manager of the US’s largest university endowment.

The value of Landmark’s deal was around $1.6 billion and is the largest real estate secondaries transaction so far this year. The deal was revealed in a statement from Kirkland & Ellis, which provided legal advice to Landmark.

While the statement did not name the seller, referring to it as an “American university’s endowment”, two sources familiar with the deal confirmed to Secondaries Investor the endowment was Harvard.

Landmark’s transaction, which reached first close in July, is described by the law firm as a “leveraged secondary market acquisition” which includes the assumption of unfunded commitments.

Metropolitan, which is Carlyle’s real estate-focused secondaries and fund of funds unit, acquired more than $250 million worth of stakes in a separate deal, according to one of the sources. The figure includes unfunded commitments and involved stakes in a handful of managers that Metropolitan has strong relationships with, the source added.

It is understood that both Landmark’s and Metropolitan’s deals closed around the same time.

Landmark did not return a request for comment by press time. Metropolitan declined to comment.

In April Secondaries Investor reported that Harvard had approached advisor Greenhill Cogent to help it reduce its exposure to the real estate asset class. The portfolio consisted of at least 50 fund stakes diversified by strategy, regional focus and vintage, sources said at the time.

Harvard’s move to divest was reportedly driven by Rick Slocum, who took up the newly created post of chief investment officer in March.

The endowment has sold in the real estate secondaries market before. In the first half of 2015 it put $1 billion of stakes on the market, around $500 million of which ended up being acquired.

Landmark is in market with its eighth real estate secondaries fund. Launched in autumn 2016, it has a hard-cap of $2.75 billion. A first close was held in December followed by an interim close in February on a combined $505 million, according to data from sister publication PERE.

Metropolitan is also in market, seeking around $1 billion for its sophomore secondaries fund. The fund held a “strong first close” in the second quarter of this year, David Rubenstein, Caryle’s founder and co-chief executive, said in an earnings call on Wednesday.

According to data from Greenhill Cogent, real estate secondaries transaction volumes stood at $4 billion in the first half of 2017, driven by a handful of large transactions and an increase in dedicated dry powder. “The market is on track to meet or exceed the record $7.5 billion of real estate transaction volume in 2015,” the investment bank noted.

– Rod James and Adam Le contributed to this report.