Real IS buys 15% of intermediary REAX to access secondary fund market
Fund service provider Real I.S. has bought a minority share in Hamburg-based investment intermediary Real Exchange (REAX) in a clear sign that it expects high future growth in the secondary market for real estate funds.
The investment, for an unknown price, should enable Real I.S. to position itself in the growing German market for open-ended real estate special alternative investment funds at an early stage. REAX, which serves institutional investors, is an adviser on the trading of real estate fund units. Its business model includes the brokerage, valuation and transaction support of fund shares.
Jochen Schenk, CEO of Real I.S. said: “In the wake of the Corona crisis, we are anticipating that institutional investors will want to reshuffle their real estate portfolios so as to comply with statutory investment limits, for instance. Redeeming fund units on the secondary market is by far the more attractive option.”
“We expect the market volume of the secondary market to be between two and five billion euros in the years ahead.”
Bernd Lönner, deputy chairman of Real IS, said "The fund managing KVG can only really convince buyers with the unit value or the Net Asset Value of the share. However, funds can often have reserves or even hidden liabilities, and the performance and the expected cash flow of the fund properties are strongly dependent on the management's administration. To avoid internal conflicts of interest it’s often necessary to have recourse to an independent consultant.”
Jörn Zurmühlen, CEO of REAX, said the deal underlined his company’s position as an independent and neutral platform. Fellow REAX board member Heiko Böhnke added,
"The entry of Real I.S. clearly shows that the secondary market is increasingly of interest to
investors and fund managers. Already after our first year of operations we’ve established ourselves in this market, while our services open up new opportunities for institutional investors as well as credit institutions and savings banks to further optimize their property portfolios.”
Other shareholders of REAX include HIH Invest GmbH and INTREAL International Real Estate Kapitalverwaltungsgesellschaft mbH.
Real I.S. is the real estate fund subsidiary of Munich-based BayernLB. As the affiliated company of the Sparkassen-Finanzgruppe, it is one of the leading asset managers in German, offering alternative investment funds (Spezialfonds and closed-end mutual funds) as well as an open-ended mutual fund. It manages over €9.2bn in property assets.