Private real estate investing in Asia Pacific has taken a significant step towards market sophistication with the launch of the region’s first real estate fund secondaries trading platform.
PERE can reveal that the Secondary Market Bulletin (SMB) was launched last Friday by global property services giant Jones Lang LaSalle (JLL) with an initial batch of investments valued at approximately $250 million. The firm also facilitated a first transaction.
JLL already operates a secondaries trading platform in Europe, from where it has transacted more than $1 billion of units of both European and US funds. In launching an Asian platform, the firm has stolen a march on its closest rival in property services, CBRE, which operates a real-time European secondaries trading service called PropertyMatch but has yet to deliver an equivalent in Asia.
Nick Crockett, head of corporate finance for Asia Pacific at JLL, said he expected trades of fund units in the Asia-Pacific region to reach about $500 million over the coming 12 months as parties grow more familiar with the platform and become more comfortable with trading secondary units.
Crockett described the launch of SMB as an evolution in the indirect real estate market and emphasised how the platform would enable better pricing transparency and improved liquidity to investors. Serving as a conduit between buyers and sellers, he said the platform would register seller’s required pricing and desired volume and match them with buyers who would otherwise not have known the units were available. Information submitted to JLL from both sides will be made available to subscribers on a monthly basis.
While access to the platform is free, JLL’s fees would come as a small percentage of any given trade. Crockett declined to divulge further information regarding its fees.
He said: “We know of a number of groups which have positions they want to sell but either there wasn’t previously the mechanism to do so or they felt that by going through the fund manager they would be conflicted – or they didn’t have the means or know-how to do it.”
Crockett said the launch of the platform was timed to coincide with a current market dynamic in which many investors were better capitalised but less willing to engage in new funds. At the same time there are investors in existing funds that need to exit from their positions. In Australia for example, where SMB will be managed, there has been significant investor consolidation and consolidation in terms of the managers they support.
“As a result we’ve seen some investors which usually write minimum size tickets of $50 million or $100 million which have gone through a consolidation and find themselves with stakes worth $5 million or $10 million,” Crockett said.
He said the first batch of investments available for purchase ranged from core funds in Australia to pan-Asia opportunity funds and even one global fund position. In terms of discounts, he said he expected the core funds to trade at single-digit discounts while the more opportunistic fund units – particularly those with meaningful uncalled capital – would trade at larger discounts.
SMB is led by Sydney-based director John Wills, who joined the firm in 2011 from consulting and investment services firm Mercer. His efforts have been supplemented by two other directors, one in Sydney and one in Singapore. All report to Crockett.