Landmark Partners tracked 108 real estate secondary transactions in 2017

Landmark Partners tracked 108 real estate secondary transactions that closed or were placed under contract in 2017, representing an aggregate total of $6 billion of net asset value. These statistics constitute the largest number of transactions and the second highest dollar volume recorded in a single year since Landmark commenced tracking real estate secondary activity.

Landmark Partners compiles data on closed and under contract transactions from a wide universe of sources, including its own transaction experience and ongoing dialogue with other key market participants.

Aggregate dollar volume of $6 billion in 2017 represents a 20 percent increase from the $5 billion transacted in 2016, although below the $8.2 billion high watermark achieved in 2015. This past year saw the return of the $1 billion+ portfolio transaction, a significant increase in activity from endowments reducing legacy fund portfolios, and a continued strong desire from fund sponsors looking to recapitalize mature funds and partnerships that have exceeded, or are close to exceeding, original term limits.

The total number of transactions climbed 10 percent in 2017, highlighting the continued broadening base of limited partners and fund sponsors utilizing the secondary market to manage legacy real estate fund portfolios, property portfolios and fund businesses.

U.S. and Europe focused funds constituted approximately 51 percent and 33 percent of activity in 2017, respectively, while Asian real estate partnerships amounted to 4 percent. Global and other focused funds represented approximately 11 percent and 1 percent, respectively.

Endowments were the most active sellers throughout 2017 representing 46 percent of total transaction volume, up from just 6 percent in 2016. This was driven by a significant portfolio transaction completed by a large U.S. endowment. Fund sponsors, fund of funds and other asset managers continued to drive robust transaction volume with 23 percent of total transaction volume last year. This group has accounted for more than $3.2 billion of aggregate transaction volume, over the last two years.

Pension funds represented 21 percent of transaction volume in 2017, down from 35 percent in 2016. Other sellers including foundations and insurance companies represented 10 percent of volume last year. Banks accounted for less than 1 percent of volume, down from 8 percent in 2016. Banks were steady sellers of private real estate exposure post Global Financial Crisis through the end of 2016 and many have successfully liquidated a significant component of their real estate fund holdings. As a result, we anticipate more episodic selling by banks going forward.

Most secondary sellers were located in the United States (75 percent), followed by Europe (19 percent), Canada (5 percent) and Asia (1 percent). Landmark’s dataset does not include the entire volume of “LP-to-LP” trades and could therefore understate the aggregate volume of activity. Such trades are naturally discreet and typically not publicly disseminated.

Transaction volume reflects an estimate of manager reported value at the time of sale and excludes trades of less than $10 million in U.K. and European unlisted funds.

Landmark Partners specializes in secondary market transactions of private equity, real estate and real assets investments, with approximately $22 billion of committed capital as of Dec. 31, 2017. Founded in 1989, the firm has one of the longest track records in the industry and is a leading source of liquidity to owners of interests in real estate, real asset, venture, mezzanine and buyout limited partnerships. Landmark has completed more than 550 transactions in its 28-year history and acquired over 2,100 partnership interests, managed by over 750 general partners, as of Sept. 30, 2017.