Brookfield: GP-led RE secondaries “compelling”
GP-led real estate secondaries strategies present a “compelling” opportunity for investors, a new report from Brookfield has found.
The investment firm highlighted those strategies that have clear active return levers and are led by managers who have a demonstrated ability to generate value through operational expertise.
The report noted that since the global financial crisis, secondaries have increasingly emerged as a significant segment of the real estate market, with room to grow within a large investable universe.
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“Both LP- and GP-led secondaries have the potential to offer access to high-quality assets at favourable entry points, portfolio diversification, shorter payback periods, downside mitigation and more,” said Brookfield.
“Given the volume of near-term fund maturities among small to midsize real estate funds, limited real estate capital raising and a challenging exit environment for investment sales, GP capital solutions – a type of GP-led secondary – present a compelling opportunity for non-core real estate allocations.”
Brookfield noted that real estate secondaries have been a rare bright spot in the economy over the past few years, and appetite for bespoke liquidity solutions among GPs has grown.
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Brookfield said that the private secondaries market has grown both in the number of dedicated funds and in the amount of capital raised. Yet for real estate, the secondaries market is still in its early years.
However, the investment manager believes that real estate secondaries fundraising is likely to continue to grow.
“As the GP-led market continues to expand, GPs are becoming more selective in who they team up with,” the report said.
“They’re looking for partners that will provide not only capital but also complementary operational and capital markets capabilities as they complete business plans.”
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