LONDON-More major banks around the world are likely to hive off non-core real estate holdings in the next two years, says Russell Platt, founder and CEO of Forum Partners, a private equity firm that in July hired Citi Alternative Investment's global real estate securities team and its $450 million portfolio, boosting its assets under management to about $2.5 billion.

"There's a window of 12 to 24 months where we will see a reshuffling of the industry, and banks like Citi and others dispose of some of their real estate investment activities," Platt told Reuters in an interview.

London-based Platt, who once managed global real estate at Morgan Stanley Asset Management, said Forum is also looking out for further deals. He expects a massive reshuffling among private RE investment firms. Steep losses brought by market turmoil mean a lot of businesses are no longer viable under current management.

Since establishment in 2002, Forum, also a major investor in Zblin Immoblien (see elsewhere in this issue), has raised three Europe-focused funds and two Asia funds, mainly funded by US and European institutional investors. It is currently aiming to raise up to $1bn over the next year for a third Asia fund. Platt said that Forum has $750m available to invest in Europe and $250 million in Asia.

The group invests mainly in listed and private property firms valued at below $2 billion through structured investments such as convertible bonds and debt, and tends to keep a 10% to 20% stake in its portfolio companies.

"In Europe, our number one target market will be the UK, followed by Germany," he said. Signs are that creditors in Europe are now more willing to negotiate deals to sell off problem loans. The firm avoids more complex debt instruments such as CMBS, much of which are under stress in Europe. "We've looked at deals out there but so many of these existing CMBS debt and notes were so poorly under-written in terms of covenants and documentation that there isn't a price at which we would own it," Platt said.