The strong trend towards club deals and joint ventures in real estate investment will reverse to a certain extent, Matthias Thomas, chief executive at INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, told members of the press in Frankfurt.
Many institutions have chosen this form of investment in recent years because 鈥渢hey wanted to get more control over the products they had allocated money to鈥�, he said.
鈥淏ut if you want to have influence and control over the investment,鈥� he added, 鈥渢hen you need HR resources, as well as market knowledge.鈥�
He said many smaller institutions were looking into club deals and joint ventures and 鈥渢rying it out鈥�, but he questioned whether they would continue to invest in these vehicles.
However, Thomas acknowledged that club deals and joint ventures were an 鈥渆stablished way of investing鈥� and said larger institutions such as major Versorgungswerke had 鈥渄efinitely鈥� established the necessary know-how for such vehicles.
According to INREV鈥檚 2014 investment intention survey, the trend towards joint ventures and club deals continues, but 鈥渋nterest levels have now passed their peak鈥�.
Nearly 40% of investors in Europe expect to increase allocations to these investment vehicles compared with almost 50% in 2013 and well over 65% in 2011.
鈥淟arger investors are looking at club deals and joint ventures, while smaller investors remain committed to funds,鈥� INREV noted in a report on the survey.
Thomas said the reason for investors wanting more control in real estate vehicles was a 鈥渃ertain level of disappointment with managers and co-investors鈥� during the financial crisis.
鈥淥ne problem was the style drift 鈥� i.e. you think you invest in core, but, over time, the fund drifts towards value-add,鈥� he said.
However, he added that, for him, 鈥渃ore鈥� can only ever exist at a certain point in time, as any real estate asset goes through different risk stages during its lifetime.
鈥淪o, in fact, 鈥榗ore鈥� can only ever be established on a fund level, never for a single asset,鈥� he said.
