One year ago, limited partners in private equity real estate funds were struggling from an over-allocation to the asset class. Today, many face an under-allocate after seeing their equity and fixed income portfolio values rise dramatically.
The need for liquidity is no longer as desperate, but there is still a need.
Here we present the thoughts of two senior professionals who took part in a special PERE breakfast hosted on the fringes of the annual fall Urban Land Institute conference in San Francisco in November.
Over the course of 10 days, PERE is presenting a summary of those 16 professionals’ perspectives on 2009, and their thoughts for 2010. The following are edited highlights from an article that appeared in the Dec/Jan issue of PERE magazine. Click here to view, subscribers only.
Robert Dombi, Partner,
The past year may not have set any records in terms of real estate transactions, but for Dombi the level of secondaries activity did reach a new high watermark. This particular part of the private equity real estate industry is still nascent, but with $4 billion of potential secondary deals “on pipeline”, Dombi believes 2010 will be “an absolutely record year for secondaries activity”.
Jeff Giller, Former Managing Principal and CIO,
Liquid Realty Partners
The bid-ask spread was a major barrier to real estate transactions in 2009, and for Giller it will keep secondaries deals muted during 2010. With recent vintage real estate funds having little to no equity value remaining, the first priority for LPs will be to help restructure and recapitalise their investments. “Until these things happen, there will be little in the way of equity for limited partners to sell to secondaries buyers.”