EUROPE - Investors in unlisted real estate vehicles are more often than not opting to delay fund terminations due in the next two to three years.

The European Association for Investors in Non-Listed Real Estate Vehicles (INREV) found nearly two-thirds (59%) of investors surveyed said they will extend the lifetime of funds maturing between now and 2011.

The findings were announced at this year's Expo Real event in Munich, where delegates learnt that the fund investments being extended equated to a total of €15.8bn in gross asset value.

The results of INREV's annual fund termination survey last year suggested that investors were leaning towards termination extensions, but this year's findings represent a far clearer indication.

The INREV report concluded that although investors are also seeking more liquidity in today's market they have shown their support for the continuation of funds.

It added that the current challenging conditions in the European real estate market are the main reason why many investors and fund managers have decided this is not the best time to sell assets.

"Continuation is again the most frequently used termination option, similar to last year," said Lisette van Doorn, outgoing chief executive at INREV.

"It is absolutely clear that fund managers and their investors are working very closely to achieve the best outcomes for each fund taking into account the very few real alternatives available in the current difficult market.

"While in the last few years the termination decision was heavily influenced by the scarcity of re-investment alternatives, this is less of an issue right now. Trust in the fund manager as well as issues at investor level, such as the need for liquidity, play a much more prominent role in the decision making process of investors" she added.

The survey showed that where funds had decided to continue, a relatively short extension of one-three years was favoured.

Extensions were preferred over fund rollover as investors have to treat the latter as a separate investment decision based on its own new business plan from the fund manager.

A number of the investors interviewed explained that these short extension periods reflected uncertainty about the timing of an economic upturn and the time it takes to sell assets.

"With the current market uncertainty, the termination decision-making process has also become much more complicated with investors in a particular fund possibly having very diverse views on the future of the fund," said Lonneke Lowik, director of research and market information at INREV.

"This also means that more funds opt for a short term continuation in order to ‘buy' time until the market has become more stable and the future opportunities become clearer."

In other INREV news, Andrea Carpenter, director of research at INREV and winner of the Outstanding Industry Contribution award at the IPE Real Estate Awards 2009, has changed her role within the organisation to director of professional standards and communications.