Liquid Realty Closes $775M Acquisition

Liquid Realty co-managing partner Jeff Giller tells GlobeSt.com that the company acquired minority interests in Jersey Property Unit Trusts that are limited partners in UK-based real estate funds managed by Schroders, British Land, Lend Lease and Grosvenor. The underlying real estate assets are 200 retail, office and industrial properties located throughout the UK.

"It's common in UK for investors and real estate partnerships to hold their interest through an offshore trust because it is a very easy type of instrument to buy and sell," Giller tells GlobeSt.com. "JPUT is such a trust."

A number of the underlying assets in the transaction are trophy properties well-known by European institutional investors. Two of those are Bluewater, the largest and most visited shopping mall in the UK, and Paddington Central, a premier office development adjacent to Paddington Station in central London.

Including this deal, Liquid Realty has about $900 million under management. Giller hopes the JPUT transaction, believed to be one of if not the largest secondary real estate acquisition ever completed, will validate the opportunity and cause more institutional real estate investors "to take a look and say 'maybe there are a few things I can prune from my portfolio'" and then call Liquid Realty as a potential exit strategy.

"This is a significant milestone for both Liquid Realty Partners and the real estate secondaries market in general," adds co-managing partner Scott Landress. "As primary capital commitments to real estate funds continue to grow, investor demand for liquidity and the ability to actively manage their holdings follows."

Liquid Realty invests in everything from core to fully opportunistic real estate and typically holds its investments for between five and seven years. Giller says the assets acquired are predominantly core-quality properties leased to credit tenants that will throw off substantial recurring cash flow. Given the UK REIT regime poised to lift off in 2007, and the ongoing supply-demand imbalance for high quality real estate investments both globally and in the UK, "we believe that the UK market will provide attractive returns on JPUT investments," he says.