Liquid focusing ‘more on recapitalisations than ever’

Liquid Realty Partners is focused on recapitalisations now more than ever given the amount of debt hanging over the private equity real estate market, said chief executive officer Scott Landress.

San Francisco-based Liquid has invested predominantly in real estate secondaries since its founding in 2001, and remains optimistic about secondary closings picking up. With that optimism, however, can come excruciating amounts of patience.

“Everybody—direct and indirect property investors—has been waiting patiently for the knife to stop falling and for values to crystallise,” Landress told PERE.

While a flood of real estate secondaries interests were anticipated in 2009 and 2010, few deals closed due to the spread between declining property values and lagging fund valuations.   Landress said Liquid was not altering its strategy, nor had it materially changed its focus in its nine-year history. The firm, he said, was simply “focused more on recapitalisations than ever” as it waited for secondary closings to pick up.

“It’s just a matter of waiting the market out and providing capital that is not over-priced for the risk,” he said.

Liquid last month hired former Morgan Stanley Real Estate Investing director Mark Degner as head of acquisitions. Degner’s primary responsibility at Liquid will be leading the acquisition team in its pursuit of secondary and recapitalisation investments.