Landmark raises $718m secondaries fund

Landmark Partners' chief executive officer, Francisco Borges, says at $718m, Landmark Real Estate Fund VI is the largest single-pooled real estate secondary fund ever raised, while the market is still in the ‘early innings’ of the cycle.

Landmark Partners, the private equity and real estate investment management firm, has raised one of the world's largest single-pooled real estate secondaries fund.

The Connecticut-based firm has raised $718 million for Landmark Real Estate Fund VI, it said today – its fifth in a fund series that began in 1996.

Landmark’s chief executive officer, Francisco Borges, said in a statement the real estate secondary market was in the early innings of its evolution, but added the fund’s investment period had begun with 20 percent of the fund’s capital already committed.

Though broader in strategy, Madison International Realty also highlighted the demand for secondaries recently when it announced it had raised $510 million for Madison International Real Estate Liquidity Fund IV. That vehicle is focused on acquiring LP and partial ownership interests in core real estate assets in the US, UK and Western Europe as well as recapitalisations and debt restructurings.

Meanwhile, Landmark’s rival, San Francisco-based Liquid Realty Partners, is reportedly in the market with a fund targeting $800 million of equity. It raised $572 million in 2007 for its fourth vehicle, Liquid Realty Partners IV and $720 million for its third fund, LRP III.

Though Landmark's Borges said its funds was the largest ever raised, Swiss-based Partners Group closed the Partners Group Real Estate Secondary 2009 fund on €750 million, although the vehicle is believed to be split into two between a European and US fundraise.

Opportunities for strong returns have not been lost on some of the biggest private equity names in Europe either. Guy Hands, the founder of Terra Firma, singled out the sector as the hottest in European real estate in an interview published in March.

“Some of the real estate funds are trading at ludicrous discounts. As long as they are not over-leveraged, they are very cheap indeed,” he said. Hands added: “Secondaries are not what we do, so it is a little bit difficult for us. Still, we think the highest returns in real estate will be in secondary funds.”

Investment professionals involved in secondaries that PERE has spoken with recently say that deal volume at the smaller end of the spectrum has been healthy in recent times as numerous limited partners look to downsize, re-weight or liquidate some positions.