Limited partners have begun using the real estate secondaries market to manage their portfolio allocations, and not only in reaction to distress in the market.

“Some investors still hold a narrower view that the real estate secondaries market is only utilized by distressed sellers needing immediate liquidity or by sellers looking to clean up tail-end portfolios,” says Jeffrey Cho, managing director with Portfolio Advisors. He notes that this perception was fairly accurate during the aftermath of the global financial crisis, when the real estate secondaries market served as a solution to sellers whose real estate portfolio consisted primarily of over-levered, globally diversified megafunds, which were the dominant funds in the market.

“Today, however, the underlying private equity real estate market has matured, and the prevalent investor preference is for GPs with a core competency in a particular property type or region,” says Cho. “As a result, the secondar