New Real Estate Fund Mandate
This week, BHA analysts spoke with a U.S. fund of real estate funds that is searching for managers running distressed, value-add, and secondaries strategies within the real estate sector. The fund of funds’ main focus for 2009 is distressed funds; its secondary interest is in value-add and secondaries focused on the U.S., Western Europe, and developed Asia (Hong Kong, Japan and Singapore). The firm does not have any specific target size for funds it invests in, however, it does require a manager to have ten years experience and hold the primary decision making role for at least five of those years. Funds should also be in the top quartile of their peer group with overall returns of at least 20 percent. When reviewing funds, the firm likes to see that leverage is used prudently and there are no recourse loans. The due diligence process will vary from four to six weeks to several months depending on the preparedness of the manager.