The Missing Ingredient to a ‘True’ RE Secondaries Market

A true secondaries market, with broker-dealers facilitating the buying and selling of private equity real estate fund and JV interests, is needed to help LPs take greater control over their portfolios.

Investors will continue to suffer from a lack of control and greater volatility in the asset class without the introduction of financial intermediaries able to help create a true secondaries market for fund and JV interests, Jim Valente, head of real estate at MSCI, told PrivcapRE in a recent interview.

“I think [the development of a secondaries market] is an opportunity for investors,” he says, dismissing suggestions that Blackstone’s $3B acquisition of real estate fund interests from the California Public Employees’ Retirement System or large fundraises for dedicated real estate secondaries funds was evidence of a market.

“That’s different than having an actual market where there’s buyers and sellers of shares of funds…[where] you have broker-dealer type agents that create markets and people can get in and out of positions [saying to their broker-dealer] I may want $200M of this, or I want to sell $100M of this or $50M of that type of interest,” says Valente.

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You can watch the full video or download the transcript here, in which Valente delves more into what a true real estate secondaries market needs