Forum Partners, the London-headquartered global real estate investment manager, is altering the way it invests in real estate to adapt to changing investor sentiment.
The firm has established a €200 million co-investment platform with its institutional shareholder Groupe La Francaise Asset Management (LFAM) to invest directly in real estate operating companies.
The creation of the Global Investment Vehicle (GIV) with the Paris-based real estate asset manager will see Forum Partners move away from its usual investing format of raising regional private equity real estate funds.
The firm has confirmed to PERE that it has scrapped plans of launching its fourth Asia fund – Forum Asia Realty Income Partners IV – which it had laid the groundwork for last year. The opportunistic fund with a mezzanine investing strategy was never officially brought to market but the firm was understood to be targeting around $500 million. PERE had reported earlier that La Francaise was expected to seed the vehicle.
The firm will now be using its balance sheet capital alongside the GIV corpus to make investments in real estate operating platforms. For any subsequent investment within the operating platform the firm will then raise third-party institutional capital.
Forum has said that it will continue to invest in Asia, where Japan, Australia and China are its key target markets, Europe, and the US where it struck its first ever deal in July last year. Outside of Asia, Forum has raised three European funds in the past, the latest being the Forum European Realty Income III that raised €442.5 million in 2007.
Forum’s decision to raise co-investment capital was believed to be partly in response to investors’ waning interest in committing capital to blind-pool funds in the current cycle and increasing preference towards investing on a deal-by-deal basis, said one person familiar with the deal.
The GIV, which will have a 10-year term, would also allow Forum to form longer term relationships with management teams due to the absence of constraints such as disposition requirements, investment periods and geographic and sector limits typical of closed-end funds, the firm said in a written statement.
“LFAM have been an active investor in a number of our funds,” Russell Platt, chief executive officer of Forum told PERE in an interview. “The new vehicle we have created in partnership with LFAM allows us to draw capital directly from them, alongside our balance sheet, for investment. For LFAM, they will not see the dilutive effect of being a minority investor in a co-mingled fund.”
Forum has made two investments in the last ten days via the Global Investment Vehicle (GIV). Earlier this week Workspace Property Trust, a commercial real estate company partly owned by Forum, closed the acquisition of 108 commercial properties in five US cities for $969 million. This was preceded by an agreement to acquire a majority stake in five retirement villages in Australia from Ingenia Communities Group, a listed senior living owner and operator.
Indeed the Australian deal marks Forum’s maiden investment in Asia via a non-fund structure.
Additionally the firm has also decided that it will no longer be actively seeking to buy standalone property assets but have a platform-focused investment approach. In the past the capital raised via Forum’s funds was invested in both types of investments. The thirteenth and final investment from the $375 million Forum Asia Realty Income Partners III for instance was in a Grade B commercial asset in Osaka, which was acquired for $25 million.
Forum Partners was established in 2002. In 2013, LFAM acquired a 24.9 percent stake in Forum. As part of the deal, the French group committed around $600 million of capital to seed Forum’s investments globally. LFAM currently owns a 19 percent stake in the company.