MIPIM 2009: Secondary fund unit sales hit €1.1bn in 2008

The secondary real estate fund unit market has picked up over the last 12 months, accounting for €1.1bn in transactions. With a further €230m of secondary trades in the pipeline, the market is set to continue as funds face cash calls from investors.

There were €1.1 billion of secondary trades in the European non-listed real estate funds market over the last year, according to the results of a study revealed by INREV at the MIPIM conference in Cannes today.

Through its Liquidity Provisions Study report, INREV said there were 18 trades in secondary units valued at about €1.1 billion, with a further €230 million of trades expected to completed soon.

The secondary unit market is expected to play a bigger role in the indirect real estate investment world going forward as fund managers seek to increase their liquidity.

Very few secondary unit portfolios have been marketed for sale in Europe to date, however last month Jones Lang LaSalle was reportedly appointed by Immofinanz to market a €800 million portfolio of 28 interests in European and Asian funds.
Liquidity has been a key focus for fund managers at the conference. Paul Vosper, head of Morgan Stanley’s property funds of funds business, reportedly said: “Investors are suffering from a mismatch of cashflows. They were expecting to use payouts from older funds to provide their commitments to new funds.
“But because of the general market, fund managers are not selling property to return cash, and investors can’t provide fresh commitments.”