RCA Insights

On the Hunt for Assets Coming to Market

By on May 14th, 2018

A common concern raised by investors trying to place capital is the lack of available real estate stock. A new feature from Real Capital Analytics can aid the search for assets that could become available. Utilizing RCA’s hold time filter we can identify assets owned by investment managers and private equity firms that may come to market soon.

INREV’s most recent Investment Intentions Survey highlighted the difficulty investors are having in finding completed assets: the ability to invest capital was the most challenging obstacle for 2018 for 45% of respondents. In another sign that completed income-producing assets are in short supply, RCA’s records show a dramatic global increase for forward funding of developments.

To shed light on where assets might be coming to market soon we looked at hold times. 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.

We used the new RCA hold time filter to analyze selected gateway markets and highlight which assets have been held for this period and not yet sold by fund managers. The result is assets that are likely come to the market soon either publicly or in off-market transactions, as funds enter their disinvestment phase.

1805 hold times MAIN v2-01

Of these selected gateway markets, Central Paris offers the highest percentage of assets (based on count of assets) in the 5-10 year bracket at 31%, or 127 office assets. Paris is a market that has struggled for attention in recent years, but saw a significant growth in activity towards the end of 2017, suggesting that assets are coming to market and investors are taking advantage of the opportunities.

Markets that have seen a recent surge in transaction activity, such as Sydney, Munich or Madrid, typically show a higher percentage of assets held for less than 5 years. Even so, in each of these markets 10% of assets fall into the 5-10 year  bucket. These could come to market soon. (The assets held for more than 10 years are those likely held by investment managers in separate accounts without term limits.)

Analysis of Central London and Manhattan suggests that approximately 20% of assets currently held by private equity or investment managers fall into the 5-10 year bracket. This equates to 255 assets in Central London and 114 in Manhattan.

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.

Users of the RCA website can find the hold time filter in the Transactions module of the RCA website under Property Characteristics. Speak to your RCA contact for training on this and other new features.

Simon Mallinson

Executive Managing Director, EMEA & APAC
smallinson@rcanalytics.com

Based in London, Simon Mallinson joined Real Capital Analytics in January 2013. Simon has board level responsibility for EMEA and APAC, with a particular passion for the continued development of RCA’s industry-leading client service and capital markets analytics.

Previously, Simon was Senior Director leading European Research at Invesco Real Estate. Prior to Invesco, Simon held a number of roles with IPD (now part of MSCI) in London and the United States. As Head of US Services, based in Chicago, he established IPD’s first North American office.

Simon is a Board Member of US association NCREIF, a member of RICS and is active across a number of other global real estate associations. He holds degrees from both Leeds and Manchester University, UK. Simon has set foot in 48 U.S. states and is looking for an excuse to visit Maine and Alaska.