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PERE Forum: LPs urged to stand up and be counted

Speaking at the annual PERE Forum in New York, Mark Burton said LPs have to staff advisory committees with people willing to 'speak out' if the opportunity fund model is to work.

Limited partners have to speak out more on advisory committees if the real estate commingled fund model is to work in the future, attendees of the PERE Forum in New York heard today.

Mark Burton, a member of the real estate advisory board of Norges Bank Investment Management, which manages the capital of Norway’s $300 billion sovereign wealth fund, said the time had come for more LPs to “be prepared to speak out”.

Addressing the 200-strong audience, the former real estate chief investment officer at the Abu Dhabi Investment Authority and the Abu Dhabi Investment Council
said LP advisory committees had to develop stronger voices for the fund model to work.

“If the fund model is going to continue in any shape, size or form, LPs need to have a sensible say and to have people representing them, representing their company, who are enabled to make decisions at that meeting and are prepared to speak out,” Burton said. Becoming more vocal, he added, was critical to protecting LPs' interests.

Later in the day, a panel of LPs urged for advisory committees to include more smaller investors, in part, to ensure experienced investment professionals attend the meeting, thereby enabling tough decisions to be made when needed. One insurance company LP even questioned whether an LP board was needed separate from the advisory committee, which primarily deals with GP conflict-of-interest issues arising from fund operations.

Meanwhile, another LP said there was often a misconception among institutional investors that limited partners on the advisory committee had a fiduciary obligation to other LPs in the fund and were “looking out for them”. That, however, was not legally the case.