We've seen an unprecedented period of turmoil in the last decade for the commercial real estate markets, with the UK no exception to global conditions. Against this turbulent background, the Association of Real Estate Funds (AREF) commissioned PwC to carry out research into the behaviour and practices of its member funds to provide an objective account of manager behaviour and to see whether there are lessons to be learned from the experience. In particular we examined: whether funds were constrained or influenced in any way from acting appropriately; the way in which investor flows were handled, in both directions; the pricing of units and of underlying assets; the management of debt; and communication with investors and their advisers.
Despite popular perceptions to the contrary, both the open and closed-ended fund models operated by UK-based managers have largely proved robust, although it's clear that some weathered the storm better than others. Certainly, one of the positives from AREF’s perspective is that there seem to have been significant improvements to transparency and communication, although investors still wish for more, particularly in closed-ended funds, and it's important to make sure this continues. That said, there are a number of issues raised by contributors that warrant further debate, to inform future product development and AREF’s governance standards through AREF's Code of Practice.
The report, “Unlisted funds: lessons from the crisis” was launched to an audience of nearly 200 senior figures from the real estate industry and real estate trade press at PwC’s More Riverside offices on Friday 13th January.