There was a consensus at this year鈥檚 annual INREV conference that real asset fund models needed to be overhauled, with more than 80% of delegates polled in Vienna saying fund structures needed to be changed.
Speakers from the fund management industry agreed on the need to review fee structures and tackle transparency issues, but they disagreed on the need for liquidity or what form it should take in funds.
Jakob Baruel Poulson, managing partner at Copenhagen Infrastructure Partners, said: 鈥淢ost of the infrastructure investments our clients had found before were wrapped in some form of private equity structure, which offered a much shorter duration of investment than they were hoping for, as well as much higher gearing and tax inefficiency.鈥�
He added: 鈥淢any institutional investors invested in infrastructure only found out later the problems with these types of investments.鈥�
Thomas Gsaenger, head of indirect investments at Allianz Real Estate, said the company was 鈥渢hinking about a back-ended performance fee, paid out as a share of the fund, which gives a better alignment of interest鈥�.
However, given the German experience with and their liquidity failure during the financial crisis, he was 鈥渘ot sure if it makes sense to have frequent redemption schemes and liquidity in real estate鈥�.
Gsaenger said: 鈥淚f the fund manager pursues value-add or opportunistic strategies and has an investment plan with dedicated assets, an open-ended fund structure does not make sense; that can only work with core.鈥�
Sophie van Oosterom, CIO at Global Investors, agreed that the 鈥渓iquidity crisis was the most important theme in all our funds鈥� and that 鈥渓iquidity is not needed on a daily basis鈥�.
But, she stressed, 鈥渋t is a myth that separate accounts, direct investments or club deals would provide better liquidity on a daily basis鈥�. She said: 鈥淭he moment when liquidity is needed is a moment when something happens in the market and that鈥檚 when the partners are no longer aligned.鈥�
Van Oosterom said that if an open-ended fund was 鈥渟et up well, marked-to-market with frequent redemption windows鈥� it should be 鈥渁ble to provide more liquidity on an ongoing basis than some of the direct deals could鈥�.
Paul Clark, CIO at The Crown Estate, said: 鈥淎 decade ago, there was a much narrower world of co-investing and now we have a greater awareness of issues like liquidity and alignment, which we only paid lip-service to 10 years ago.鈥�
Today, he added, 鈥渋nvestors have to take more responsibility for their decisions鈥�.
In 2010, The Crown Estate signed a 150-lease-back deal with the Norwegian Pension Fund Global on Regent Street properties in London for the oil reserve fund鈥檚 first foray into real estate.
Clark explained: 鈥淢ost of our partnerships are for 150 years, but the interest we create is liquid and could be traded.鈥�
