Non-listed real estate funds extend lifespan - Inrev

European non-listed real estate funds are increasingly planning to extend the life of their vehicles rather than liquidate as market conditions become more challenging, according to industry body, the European Association for Investors in Non-listed Real Estate Vehicles (Inrev).

The Inrev Fund Termination Study 2008, presented on the second day of EXPO REAL, shows that the number of funds planning to terminate in the coming two years dropped to 29% in 2008, from 52% a year before. The majority of funds (59%) are choosing to continue the life of their fund. Of them, over three-quarters plan to extend the fund and 22% plan to roll-over the vehicle into a new structure.

'Currently, the flexibility of a one-to-two year extension is attractive from a timing standpoint as it delays the need to decide whether to sell assets into a market where capital values are falling,' Inrev Research director Andrea Carpenter said. 'This is particularly the case for funds invested in the UK - where the credit crunch has hit hardest so far.'

Of the opportunity funds, 43% plan to continue their vehicle. This is unusual as opportunity funds tend to liquidate as planned. But the survey quoted managers as suggesting that the funds were attempting to avoid selling at their current market prices. Core funds are most likely to continue with 58% planning to either extend or roll-over.