7 September 2016, Amsterdam – Seventy-two European non-listed funds are scheduled to terminate over the next two years, representing a total of €11 billion of NAV returning to the market, according to new research from INREV.
The Fund Terminations Study 2016 found that 29 funds are terminating in each of 2016 and 2017, with a further 14 scheduled for 2018. These figures are down from the 2015 total of 36 funds, suggesting that terminations have now peaked following a bumper round of launches between 2005 and 2007.
Terminations in 2017 make up more than half the total NAV being put back into the market over this period with a total value of €6.4 billion as a number of larger than average funds come to the end of their lifespans.
Liquidation was the most preferred form of termination for a third year running, chosen by 72% of the respondents who have made their decisions, followed by roll over (17%) and extension (11%). Interestingly, none of those who have decided what to do with their terminating funds are considering other options such as IPOs, whole fund sales and mergers.
The data also suggests that performance can affect the decision to extend or liquidate. There was little evidence of this between 2007 and 2009, but over the period from 2011 to 2015 the gap in average annual returns has widened. Last year the gap was 14.2%, with extending funds delivering an average return of 8% contrasting sharply with the -6.2% average for liquidating funds.
Commenting on the findings, Henri Vuong, INREV’s Director of Research and Market Information, said: “We are seeing an increasing amount of variance in the length of life of closed end funds, from genuine fixed term funds at one end to extendible funds that start to resemble open end funds at the other. This suggests that fund managers are taking a more flexible approach to the termination of their funds.”
“The volume of terminations will significantly exceed the number of new fund launches over the next few years. While deployment remains a challenge, this capital is likely to be redeployed in real estate fairly quickly, and there is still plenty of investor appetite to reinvest in funds,” Vuong concluded.
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For further information, please contact:
Aimen Chouchane, aimen.chouchane@firstlightpr.com, +44 (0) 20 3617 7239
Justin St Clair-Charles, justin.scc@firstlightpr.com, +44 (0) 20 3617 7233
Notes to Editors
About the Fund Terminations Study 2016
The Study provides an analysis of the closed end funds within the INREV Vehicles Universe which are due to terminate over the 2009 to 2019 period.
The Study also includes an analysis of survey responses from funds due to terminate in the next two years. This was based on a sample of 48 funds which completed the questionnaire-based survey, of which 23 are due to terminate over the coming two years.
About INREV
INREV, the European Association for Investors in Non-listed Real Estate Vehicles, was launched in May 2003 to act for investors and other participants in the growing non-listed real estate vehicles sector. The non-profit association is based in Amsterdam, the Netherlands. INREV aims to create a forum for the sector and increase the transparency and accessibility of non-listed vehicles, to promote professionalism and best practice and to share and spread knowledge. INREV currently has 388 members drawn from leading institutional investors, fund managers, banks and advisors across Europe and elsewhere. In 2015, 40 new members joined INREV. For further information, please visit https://www.inrev.org/