Library

This research explores whether there is evidence of persistent performance among core open end European non-listed real estate funds.

This research aims to identify risk factors affecting the performance of non-listed real estate funds in Europe, controlling for their specific characteristics.

The non-listed real estate industry has grown considerably over the last decade and with it the interests and needs of market participants. The research objective of this study is to examine the current status and the influence of corporate governance on the volatility and returns of non-listed real estate funds, and seeks to address the following questions:

• How has corporate governance for the non-listed industry changed over the last twenty years?
• How does corporate governance affect fund performance, risk, volatility and capital raising ability?

There is increasing interest to better understand the performance between capital expenditure (cap-ex) and performance.

INREV’s latest academic research shows that high levels of cap-ex tends to have a more positive and significant impact on performance.

There are significant variations in levels of cap-ex, and the impact is greater in the UK and the USA than in Germany and the Netherlands. Offices tend to benefit from cap-ex in Germany and Netherlands, while it is a drag on future performance in the UK and USA.

The research looks at the case of Germany, the Netherlands, the UK and the USA.

This study focuses on the liquidity needs and requirements of investors who invest in indirect real estate. The aims of the study are to identify how investors define liquidity, discover the importance they ascribe to liquidity when compared to other investment considerations and explore the factors that influence their liquidity needs. Furthermore, the study examines investor views on the drivers of indirect real estate liquidity and their perspectives on the liquidity of indirect real estate vehicles, with a particular focus on closed end and open end real estate funds. Preferred secondary market transaction methodologies are also examined. Finally, investor suggestions for changes to the indirect real estate market which could enhance liquidity are discussed.

Non-listed core real estate funds offer the diversification benefits of real estate as part of a multi-asset portfolio and can provide investors with an accessible and transparent route to gain exposure to the sector. They are a maturing part of the European real estate industry that is now launching its second generation of funds. The first generation of funds faced the extreme challenges of the Global Financial Crisis (GFC) head on; an experience which has resulted in a refined and reconsidered fund product for the new cycle. This paper highlights both the qualitative and quantitative benefits of core real estate funds in Europe and how they can support the investment requirements of investors. The industry offers a wide range of products to match risk/return requirements, but this report focuses on core non-listed real estate funds as a natural entry point for investors that are looking for real estate exposure.

This is the second in a series of academic papers that INREV will publish. Going forward INREV plans to invite the academic community to research the European non-listed real estate market in more detail.

Over the past decade, the European institutional non-listed real estate fund market has matured into an investment category that consists of 472 funds, representing €227 billion of gross asset value. But maturity cannot be measured by numbers alone. In this paper, we examine the recent evolution of the non-listed fund market with respect to transparency and performance. In line with the private equity literature, we analyse the returns and fees that investors face when investing in non-listed real estate funds. Our results show that non-listed real estate funds have delivered moderate but stable total returns over the past thirteen years. Compared to Europe’s public real estate market, the non-listed core fund index yielded an average return of 5.2% which is more than 2.0% lower than the public real estate index return, but at a risk (standard deviation) of 9.7%, which is less than a third. The total fee load of non-listed real estate funds (2.2%) is low compared to private equity (7.0%). This fee could be ened back by selecting the funds that rank highest on their sustainability performance, as our analysis shows a 2.8% return spread between the top and bottom Global Real Estate Sustainability Benchmark (GRESB) deciles. A large fraction of this return pattern, however, relates to the associated variation in fund leverage. Hence, transparency regarding non-listed fund characteristics is key and although the market is not there yet, it is gaining momentum and relevance.

This is the first in a series of academic papers that INREV will publish. Going forward INREV plans to invite the academic community to research the European non-listed real estate market in more detail.

This paper aims to provide a better understanding of the key drivers of European non-listed real estate funds performance, which in turn will aid portfolio managers in making more informed investment decisions. It also seeks to understand the extent to which stock selection and management skills contribute to a fund’s total return, outperformance and risk adjusted performance. This academic paper has been written by Franz Fuerst (University of Cambridge), Wayne Lim (University of Cambridge) and George Matysiak (Master Management Group & Cracow University of Economics).

Since 2009 the European real estate market has witnessed the launch of a number of non-listed real estate debt funds from large and small fund managers with more expected to follow. INREV conducted this study in 2012 to provide its members with an insight into the debt funds segment. The snapshot is publicly available while the full report is for members only, please login if you cannot view all of the downloads below.

This paper re-evaluates the case for investing in non-listed real estate funds in the aftermath of the financial crisis and synchronised downturn in real estate markets. The research addresses the performance of the sector relative to other real estate investing options and re-visits the key components underlying the rationale for investing in the sector. This document is for members only, please login if you cannot view all of the downloads below.