Investors have been reluctant to commit fresh equity to existing non-listed real estate funds, according to a debt survey carried out by the European Association of Non-Listed Real Estate Vehicles (Inrev). The Inrev study also reveals high levels of concerns about debt issues in non-listed property funds. The majority of fund of fund managers (53%) questioned said they were very concerned about the possibility of funds breaching their covenants. About 40% of investors questioned were 'very concerned' and 48% 'concerned'.
Investors have been reluctant to commit fresh equity to existing non-listed real estate funds, according to a debt survey carried out by the European Association of Non-Listed Real Estate Vehicles (Inrev). The Inrev study also reveals high levels of concerns about debt issues in non-listed property funds. The majority of fund of fund managers (53%) questioned said they were very concerned about the possibility of funds breaching their covenants. About 40% of investors questioned were 'very concerned' and 48% 'concerned'.
The study, presented Thursday at the Inrev annual conference in Athens, indicates that a third of investors and half of fund of funds managers who have been asked to commit fresh equity have declined to do so.
About one fifth of investors have committed new equity to existing funds in the last 12 months. Just 13% of fund of funds have fulfilled a similar request. But Inrev notes that fund of funds vehicles have to seek approval from their own investors.
Russell Chaplin of UBS Asset Management and the Inrev research committee, said fund of fund managers were probably most concerned about the possibility of funds breaching their covenants as in general the fund of fund business invested in real estate funds dating from 2006-7 when leverage levels were at their highest.
The debt survey indicates that 36% of investors saw 2006 as the most difficult fund vintage while 27% of fund of fund managers selected 2007.
