May 17, 2018
Investors trying to place capital today are often faced with a common dilemma: where’s the available real estate stock? There’s a host of reasons for that situation, and it is further compounded by the fact that it is tough to know what assets may soon come on the market.
Real Capital Analytics (RCA) has a novel “hold time” feature that reveals assets that are in late stages of an investment managers’ or private equity firms’ hold period. The result of this filtering can uncover assets that are likely come to the market soon, either publicly or in off-market transactions, as funds enter their disinvestment phase.
RCA’s Simon Mallinson notes, “Analysis of RCA’s records show that investment managers and private equity firms hold assets for an average of 6.8 years. This makes sense given that a typical fund life is between 5 and 10 years, and investors look to dispose of assets in the final third of the fund life.”
RCA analyzed the 100 most active global markets. Of these, 67 have between 10% and 30% of assets held for 5 to 10 years, with the potential to release over 800 assets as funds move towards their disinvestment stages.
Among the selected gateway markets RCA examined:
– Central Paris offers the highest percentage of assets (based on count of assets) in the 5 to 10-year bracket at 31%, or 127 office assets
– Markets such as Sydney, Munich or Madrid show higher percentages of assets held for less than five years, yet each of those markets have 10% of their assets in the 5 to 10-year bucket
– In the cases of Central London and Manhattan, roughly 20% of their assets fall into the 5 to 10-year bracket, equating to 255 assets in Central London and 114 in Manhattan
For comments, questions or concerns, please contact Dennis Kaiser