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The Langham Hall Real Estate Fund Structuring Summit 2015

Langham Hall

Mike Sales (Head of TH Real Estate) met with leading law firms and professional services companies to discuss trends in the European real estate market.

Hosted by Langham Hall’s founder Rob Short, the group met at an interesting time – the backdrop being record Western European investment volume buoyed by foreign capital, the stockpiling of billions of euros of dry powder by private equity firms, very keen yields for prime assets and plenty of monetising of investments by fund managers taking advantage of voracious demand for income-producing real estate. With such a backdrop, items on the agenda were:  

• Strategy drift by managers and what products investors were looking for
• The role of permanent capital vehicles, hybrids and co-investment
• Industry consolidation
• Funds vs Joint Ventures and Segregated Accounts
• Asian and US capital
• Taxes and fees  

It has been the case that many limited partners have wanted a greater degree of control over investments. Therefore, firms such as TH Real Estate have seen emphasis placed upon separate accounts and segregated mandates. In this respect, much of the international capital TH Real Estate has been a conduit for has emanated from Asia and Australia.

It is also true that short-termism remains a no-no, which is why there is growing interest in permanent capital structures.

Mike Sales revealed TH Real Estate, for example, is examining the possibility of launching more open ended strategies. “We are interested in permanency and longer-dated funds because the market got swept up in short term returns as if we were investing in equities and bonds, and really we are not,” he said. “We are now looking at pooled funds with open ended structures and a much higher degree of permanency.”  

Mike added: “What we are trying to do is lay out on the shelf a product that has duration to it. It is something we can permanently sell to the market, and not be constantly going (back) to investors for renewal which takes up an extraordinary amount of time and can be complex.”  

The issue of permanency and longer-dated funds was the hallmark of the Summit. It was a theme returned to again and again.  

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Issued by Henderson Real Estate Asset Management Limited, 201 Bishopsgate, EC2M 3BN. Authorised and regulated by the Financial Conduct Authority. TH Real Estate is a name under which Henderson Real Estate Asset Management Limited provides investment products and services.

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