Liquid in largest real estate secondary deal ever

The San Francisco-based real estate secondary firm has acquired a UK portfolio of assets for $775m, believed to be the largest secondary transaction to date in the private equity real estate sector.

Liquid Realty Partners, a secondary firm focused on acquiring interests in private real estate partnerships, today announced the purchase of a portfolio of UK real estate assets for £435 million ($775 million; €615 million). The transaction is believed to be the largest secondary real estate acquisition ever completed, according to a statement released by the firm.

The acquired assets include interests in ten different Jersey Property Unit Trusts (JPUTs), comprising 200 retail, office and industrial properties located throughout the United Kingdom. The fund managers overseeing these assets include Schroders, British Land, Lend Lease and Grosvenor.

“The assets we acquired interests in are predominantly core-quality properties that are leased to credit tenants and, therefore, will generate substantial recurring cash flow,” said Jeff Giller, co-managing partner and chief investment officer of Liquid Realty. “With the UK REIT regime poised to lift off in 2007, and the ongoing supply-demand imbalance for high quality real estate investments both globally and in the UK, we believe that the UK market will provide attractive returns on JPUT investments.”

As primary capital commitments to real estate funds continue to grow, investor demand for liquidity and the ability to actively manage their holdings follows.

Scott Landress, CEO, Liquid Realty Partners

Liquid was founded in 2002 by Giller and Scott Landress, chief executive officer and formerly the global head of real estate investment banking at Bank of America. The firm closed its second fund on $150 million in 2004. Though Liquid Realty is the only secondary investor focused exclusively on the private real estate market, other notable firms such as Landmark Partners and Credit Suisse also target real estate investments. Landmark recently closed its fifth fund dedicated to real estate secondaries on $368 million.

While the secondary market in real estate is not as well developed or as competitive as the mainstream private equity sector, it is expected to grow significantly over the next few years given the amount of investor interest in the asset class.

In a statement announcing the recent transaction, Landress said, “As primary capital commitments to real estate funds continue to grow, investor demand for liquidity and the ability to actively manage their holdings follows.”