Secondary European funds portfolio goes to US buyer

10 holdings in Project Carnaby with a value of €80-€90m under offer

A portfolio of secondary units in south-eastern European funds is under offer to a US buyer.

Jones Lang Lasalle Corporate Finance advised the vendor, a UK-based fund manager, on the sale of 10 holdings packaged as Project Carnaby.

The value of the portfolio’s units is believed to be between €80m and €90m, but the underlying leveraged assets – land, developments and property in countries such as Romania, Ukraine, Russia and the former Yugoslavia – may not have been recently marked to market.

A price at around 50 cents in the euro is thought to have been agreed for Carnaby with the chosen bidder.

Its identity is unconfirmed but has been tipped by sources as a US fund of hedge funds. One said: “What is interesting is a new, increasingly diversified group of buyers looking at this market.”

Jones Lang Lasalle CF declined to comment.

A second portfolio has been in the market, of units with a face value of approximately $100m in eight European and Asian real estate funds plus others in the US, and is under offer. CBRE Real Estate Finance and Lazards are advising the vendor, a Dutch financial services group.

Lazards has agreed a sale of the US units, roughly 60% of the whole by value, to a US buyer for a single-digit discount. One source said: “About half the US portfolio was an interest in a 2010 post-crisis fund which a lot of people were keen to get exposure to”.

One newcomer to European property fund secondaries is Origami Capital, which last year raised the Origami Secondary Fund 2 to buy illiquid fund shares.

Paul Parker, head of Europe and Asia at private equity and property secondaries specialist Landmark Partners, said: “People now accept the secondary market as an obvious property investment management tool. There is plenty of capital, from specialist players like ourselves and there are ‘one-offs’ too.”

Earlier this year, Landmark Partners said it expected global secondary trades to increase this year, from $12bn to $14bn, including more in Europe. (See European fund terminations)