Partners Group has raised $1.95bn (€1.54bn) for its global real estate secondaries strategy as interest from investors rises.
The investment manager said Partners Group Real Estate Secondary 2013 was “heavily over-subscribed”, following strong interest from institutional investors.
The capital raise was claimed to be the largest for a programme dedicated to trading in real estate fund and portfolio interests on the secondary market.
Investors include a mix of new and existing institutional investors. Sovereign wealth funds, public and corporate pension plans, endowment funds and foundations have committed to the strategy, along with insurance companies and financial institutions.
Fabian Neuenschwander, the firm’s vice president of real estate secondaries, said: “There’s a lot of demand for the programme; investors like the strategy and see the opportunity.”
Neuenschwander said the dynamics of the real estate secondary market – in which it has so far made $2.7bn in trades – remained interesting, with increased activity in the secondary market since the first quarter of this year.
The real estate secondary market is still fairly young when compared to that in private equity.
“We see more activity in this space, it’s becoming a more established market,” Neuenschwander said. “It’s not as competitive as the private equity space.”
Real estate portfolios, including single assets and joint venture portfolios, will be bought on the secondary market on behalf of clients.
Partners Group’s latest programme has already acquired several property portfolios and committed 20% of its capital. In August, the manager bought 31 investors out of a troubled Chinese property fund, taking on $120m in commitments from limited partners in the $1bn Trophy Property Development (TPD) fund. The deal made Partners the second largest limited partner in the vehicle.
Partners then bought a real estate portfolio in Finland and Sweden for €300m at a discount from investors in Nordic investment manager Niam’s Fund III, which is being wound up.
There is, Neuenschwander added, no shortage of opportunity – both as a consequence of the financial crisis but also as investors begin to reassess their assets and reshuffle portfolios.
“We have a bias towards solutions where funds are close to their maturity,” he said. “We are looking at the whole range but we want to remain selective.”
