Extension overtakes liquidation as top form of fund termination

11 September 2017, Amsterdam – A total of 47 European non-listed real estate funds are scheduled to terminate between now and 2019, returning a potential €8.5 billion to the market, according to new research from INREV, the European Association for investors in Non-Listed Real Estate Vehicles.

The Funds Termination Study 2017 also found that, for the first time in four years, extension has overtaken liquidation as the preferred strategy when it comes to termination decisions. The data suggests a connection between termination status and performance – between 2012 and 2016, extending funds generated 5.3% per annum while liquidating funds delivered returns of -3.1% on average per year. When asked about the factors affecting termination decisions, more than a third (35.3%) of respondents stated that current market circumstances were the most important driver.

Twenty-seven funds are due to terminate in 2017 alone, representing €5.6 billion of total net asset value (NAV). In 2018, 13 funds totaling €1.6 billion of NAV are scheduled to terminate and a further seven funds, amounting to €1.3 billion, will terminate in 2019.

Fund terminations scheduled for 2017 are almost evenly split between multi country and single country vehicles (59.3% vs 40.7%).  Of these, almost half (45.5%) have a UK-focused strategy and account for 80.6% of the overall NAV.

Retail funds make up the largest share of sector-specific vehicles terminating over the coming two years – a potential reflection of investor sentiment as shifting consumer shopping habits continue to drive structural changes in the sector.  Retail funds make up 40% of the single sector funds terminating in 2017, and this trend is likely to continue into 2018 – where retail vehicles will make up 60% of single sector fund terminations.

Commenting on the findings, Henri Vuong, INREV’s Director of Research and Market Information, said: “2017 is the year of extensions, which comes as no surprise as real estate funds in extension have enjoyed far healthier returns than those that have been liquidating over the past five years. This trend underlines investors’ continued appetite for the sector and confidence in the diversification benefits of real estate.”

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For further information, please contact: 

Hannah Thompson, hannah.thompson@firstlightpr.com, +44 (0) 20 3434 1011
Kirsty Wilson, kirsty.wilson@firstlightpr.com, +44 (0) 20 3434 3840

Notes to Editors

About INREV

INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €2.1 trillion and INREV members deliver €300 billion of stimulus to the real economy of Europe.

INREV members include around 75 of the largest institutional investors as well as 40 of the 50 largest real estate fund managers, plus banks and advisors across Europe and elsewhere. Forty new members joined INREV in 2016.

The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands.