Research & Data

Real estate secondaries funds target $2.34bn

As interest in real estate secondaries grows, funds in market are targeting more than $210m dollars more compared with this time last year, according to PEI data.

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Real estate secondaries funds are chasing about $210 million more this year compared with the same time last year, as interest in secondary fund stakes in the asset class grows.

Five real estate-focused secondaries funds were targeting a combined $2.34 billion as of 1 October, according to PEI’s Research and Analytics division. This is a rise from $2.13 billion at the same point last year.

Current real estate secondaries funds in market include:

Fund Name Fund Manager Target Size (m)
Madison International Real Estate Liquidity Fund VI Madison International Realty $950
Strategic Partners VI Real Estate Blackstone Strategic Partners $750
Metropolitan Real Estate Partners Secondaries & Co-Investments Fund Metropolitan Real Estate Equity Management $400
Real Estate Debt and Secondaries Ky (REDS) Pohjola Property Management €150
Lingerfelt Commonwealth Value Fund II Lingerfield Commonwealth Partners $75

Madison International Realty is raising the highest amount, with $950 million.The funds are either global or North American-focused.

A big difference between 2015 and 2014 is Landmark Partners‘ Landmark Real Estate Partners VII, which closed on $1.6 billion in May, exceeding its $1 billion target.

“Real estate secondaries are certainly a trend we’re seeing, but you need dedicated teams to make them work,” said a London-based source who focuses on secondaries at a global firm. “Pricing has even come up a bit as people figure out that it’s quite an interesting play.” The source added that recent deals his firm has completed traded at between 85 to 90 percent of net asset value (NAV).

Large real estate secondaries deals have been continuing, with Partners Group closing a deal to purchase a portfolio of assets through the secondary market from DLJ Real Estate Capital Partners worth around $163 million, Secondaries Investor’s sister publication PERE reported in September.

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Source: PEI Research & Analytics