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INREV taking on the world

The European association acting on behalf of investors in unlisted real estate funds is forging links in Asia with the ultimate aim of introducing a single way of thinking about transparency issues. By Robin Marriott

In Europe, limited partners in unlisted real estate funds wish for better information on Asia funds. That's not surprising. Just as US investors are confronted with opportunities to invest in Asian-focused vehicles, so too are their European counterparts. Like US LPs, European institutions also want to diversify outside of their own backyard.

The surprise, though, is that for all the power and size of the US market compared to Europe, it seems European LPs are now just as likely to get access to the kind of comparable data they need after the organization that represents them (in return for a membership fee, of course) reached out to their counterparts in Asia.

Meeting with the Asian Real Estate Association (AREA) in January was Lisette van Doorn, chief executive of the European Association for Investors in Non-listed Real Estate Vehicles (INREV), and chairman Johan van der Ende. According to van Doorn, AREA seemed keen to co-operate.

The first initiative will be gentle enough: To research and publish an Asian Investment Intentions Survey mirroring INREV's European version. To that end, INREV has placed a person in Singapore to carry out the work.

Publishing a forecast of where investors and fund sponsors are going to be investing is a just a step towards more initiatives, however. Ultimately INREV would like its members to prosper from greater transparency from Asia funds, a move that would involve the creation of an Asian version of INREV's guidelines on corporate governance, fee structures and the creation of a performance benchmark database to match INREV's European Index.

Van Doorn says its move on Asia comes in direct response to its members who made their wishes known in its 2007 annual survey. However, the impetus to reach out to Asia stems from another measure of demand, according to Van Doorn: “I get a call a day from members asking about Asia and whether we have the same information available that we have on Europe.

“We don't think we can do this from Europe. For us it is important to see if we can co-operate with AREA.”

AREA's mission statement compares with that of INREV's, but the chances of something constructive happening to the benefit of European LPs is more closely linked to the evolutionary stage of the Asian organization.

What started out essentially as an old-boys network for compatriots in far-flung Asian markets has reached a crossroads. It now has a serious number of members from distinguished organisations as PERE discovered when we hosted the PERE Forum: Asia conference with them in Hong Kong in February. AREA realizes it has such as powerful base, and that there is so much interest in the region from private real estate funds, that it has to achieve more. Co-operating with INREV would be a step forward.

Obviously, it will take some buffeting along the way from fund managers resisting moves designed to make them share performance data and contribute to greater transparency. But as experience has shown in Europe, progress is possible.

INREV's move on Asia is a sensible tactic. If it fails to listen to its members it will find them drifting away. It is also possible to interpret its pro-activity in a more exaggerated way. In making a move in Asia it could theoretically find a way to bump up membership numbers and also in the process overtake its US counterpart. Van Doorn rejects that take. She says she has no eye on what NACRIEF is doing. The National Council of Real Estate Investment Fiduciaries is not in her mind and she insists that her focus is not to drum up more members but to serve the ones INREV already has. If membership increases in response to taking on Asia then that is a welcome by-product.

“I am not focused on increasing members,” she says, “only fulfilling members' requirements. Asia is not a top priority, Europe is the top priority.”

That may be so, but the location of INREV's annual conference held last month spoke volumes. Reflecting the way the market is going and where the focus is, INREV chose Turkey for the event. The Kempinsky Ciragan Palace is located in the modern part of Istanbul with the Asian community is a short ride away.

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