Real estate secondaries volume grew 8 percent in 2014 to $6.9 billion, up from $6.4 billion in 2013, according to a report from the private funds advisory team at Jones Lang LaSalle Corporate Finance (JLLCF).
The bulk of the transactions, $2.7 billion or 39 percent, came from North America. Activity in the region grew by 23 percent year-on-year, while deals in the UK fell 12 percent to $2.2 billion. JLLCF attributed the decline to changes in the exchange rate, because UK volume was stable in sterling terms at £1.5 billion ($2.3 million; €2 million).
Secondaries demand in the UK remained strong in funds like Legal & General Industrial Property Investment Fund, an £811 million fund that launched in 1997, JLLCF disclosed. It invests in good quality, higher-yielding industrial estates and it owns a number of distribution warehouses.
Meanwhile, continental Europe generated $1.1 billion of activity, representing a 10 percent growth over 2013, although few sizeable portfolio sales occurred in the region.
Deal volume in rest of the world was $900 million, as several transactions took place in South America and Southeast Asia. But transactions in pan-Asian funds declined from 2013, according to the report.
JLLCF’s estimate is in line with that of Setter Capital, which estimated $6.8 billion of real estate fund stakes were traded last year. Meanwhile, private equity and real estate secondaries shop Landmark Partners estimated $4.8 billion. The firm noted its estimate explicitly did not capture LP-to-LP trades, single asset real estate joint venture partnerships and other private non-fund vehicles, so the overall volume could be significantly higher.
Source: Jones Lang LaSalle Corporate Finance