Inrev to add opportunity funds to index

The European Association for Investors in Non-listed Real Estate Vehicles (Inrev) is working to introduce opportunistic funds in its annual Index to complement the core and value-added investment spectrum.

Speaking at the Inrev annual conference in Barcelona, research director Casper Hesp said a consultation list of opportunistic funds is planned for the fourth quarter of 2013.

At present, the organisation's index includes core funds representing some €130 bn of assets and €37 bn worth of value-added vehicles. These funds showed returns of +0.3% and -4.7% respectively in 2012. In total, the index represents 294 funds with the UK and Germany each representing a 25% share.

Hesp said the group is also working towards the launch of a global index in cooperation with its US and Asian counterparts, NCREIF and Anrev. ‘We are launching this based on a sample of core funds, which are the best covered in Europe,’ Hesp said. This will help them to properly compare non-listed real estate fund performance with other competing asset classes on a global level, he added.

Europe represents roughly 33% of the global index by volume, with the US dominating the picture at 55%. The global index will include a total of 643 funds representing a gross asset value of €500 bn, with the potential to reach €750 bn in the future.

Hesp said the first index results show that core Asia is outperforming both the US and Europe on a seven-year horizon, reporting a return of 7.3%, versus 0.6% for Europe and 2.7% for the US.

Commenting on the decision to launch a global index, Hesp pointed out that today more than ever investors are active on a global bases and that non-listed funds are a global asset class. ‘Many fund managers are part of global platforms and are interested in analysing risks and returns of the funds across the globe on a like for like basis,’ he noted.

Inrev’s ambitions to take a more global approach on the non-listed fund industry is reflected by the appointment of three new member of its board, Eric Adler, global chief investment officer at Pramerica Real Estate Investors; Wenzel Hoberg, managing director and head of real estate investments - Europe at the Canada Pension Plan Investment Board (CPPIB) and Allan Mikkelsen, partner at Sweden's ATP Real Estate.

‘Today we look at global capital flows, where capital is raised and deployed across Europe. Limiting ourselves to the old continent is no longer possible,’ commented Inrev CEO Matthias Thomas.

The move also comes in response to the emergence of new investment strategies, he added. With more investors concerned about the control of their investment vehicles, club deals and joint ventures have emerged as an alternative investment model to the traditional fund structure.

‘We (as the investor community) believe in alignment of interest and we want more control. This means that club deals are increasingly being used and that funds are interacting more and more with investors. The line between club deals and funds is disappearing,’ said Eric Adler of Pramerica.

Inrev’s research director Hesp said the new structures have already been included in the database of the general Inrev spectrum and the organisation is working towards including club deals in its annual index 'as soon as possible'.