REAL ESTATE - Cazenove says most investors have welcomed the new real estate trading facility it has launched along with Morley Fund Management and DTZ.
Morley last week unveiled a UK "trading facility" for its own unlisted real estate funds – saying the move had been driven by "considerable investor demand" from institutions throughout Europe.
The system, dubbed T-Plus, will initially only trade Morley's Mall Fund. Investors in the fund include names such as ABP, Hermes, ING Real Estate, Sparinvest, Prudential and Scottish Widows Investment Partnership.
Cazenove spokesman Richard Cotton said investors broadly supported expansion to include other funds, though "a few like the idea of being in a small club".
Cotton said the move would help close the divide between quoted and unquoted real estate. "I'm reluctant to make predictions about the timeframe because we're doing something new," he said, "but attitudes are changing".
Over the next few months, the bourse will encompass Morley-managed UK and continental European sector-specific funds worth €13bn.
Although the firm says it is in discussions with other investment management firms, it has reached no agreements so far to include outside property funds. Yet their participation suggests optimism on the part of DTZ and Cazenove, which will initiate research coverage, that it will expand in the longer-term.
The partners have already traded £500m (€738) in the first quarter, and expect annual turnover to reach 10-15% of unit holdings.
Illiquidity and a lack of transparency in the market for unlisted real estate have long concerned potential investors. In a statement, Morley said the new exchange would significantly increase transaction speed and liquidity.
Morley is currently considering a proposal to reduce the minimum holding in the fund to £100,000, possibly to attract charities and high net worth investors.
Other firms potentially involved are Land Securities and F&C Asset Management, who both were quoted as welcoming the development in the Morley statement.
The facility will provide standardised settlement and information via a website.