ACQUSITION OF LIMITED PARTNERSHIP INTERESTS IN REAL ESTATE PRIVATE EQUITY FUNDS, PARTNERSHIPS OR JOINT VENTURE PROJECTS
PNT provides early liquidity to investors in real estate private equity funds or private real estate joint venture projects who are seeking to exit an otherwise illiquid investment. These investors may include institutions (e.g., pension funds, foundations, or endowments), family offices or simply high-net-worth individuals.
Real estate private equity is an illiquid asset class with real estate private equity funds and joint venture projects usually structured as ten-year partnerships. Investors contribute their money to the partnership as passive limited partners (“LPs”) with the expectation that the fund manager or general partner (“GP”) will fully invest the LPs’ capital into real estate assets (which are illiquid) within the first three to five years and later liquidate (i.e., sell) such real estate investments before the tenth year, thus returning all of the LP’s original capital and any profits due within ten years.
Sometimes, for reasons, completely unrelated to a real estate private equity fund’s current or projected performance, an LP investor needs to liquidate its investment prior to the partnership’s ten year duration. This could be due to an institution’s change in investment strategy or allocation limits with regard to a certain equity fund or asset class or due to a life-changing event (such as a family death) for a high-net-worth investor.
To address this reality, PNT offers to these investors a secondary market for their otherwise illiquid investment. Via the financial and human resources of its parent company, CMS Companies, PNT typically can close on LP interests within 60 days. This certainty of execution (subject to normal due diligence) makes PNT an ideal candidate for limited partners that value liquidity in this very illiquid marketplace of real estate private equity.
For General Partners
PNT understands that, for GPs managing these real estate private equity funds and partnerships, dealing with LP investors can be very time consuming and potentially distracting from the GPs asset acquisition, management and disposition priorities. If an LP expresses the need to exit its investments early, the distraction for a GP can be compounded.
As a buyer of secondary private equity interests, PNT’s objective is to be a turnkey benefit to the GP. First, PNT replaces the existing LP investor with a new LP investor (PNT) that is committed to the strategic plan for the fund’s existing real estate portfolio and for any uncommitted funds not yet invested. Second, through its parent company, CMS Companies, PNT provides the GP with a value-add substitute limited partner, whose real estate fund-of-fund experience, direct real acquisition experience and rolodex can potentially help the GP enhance fund performance.
Finally, PNT respects a GP’s need for total discretion. PNT recognizes that dealing with its LPs can be highly sensitive for a variety of reasons.
For Limited Partners
PNT will negotiate directly and discretely with the LP investors in real estate private equity funds, partnerships or joint venture projects to purchase their LP interests. PNT assures confidentiality and discretion throughout the negotiation process.
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PNT welcomes limited partners in real estate private equity funds or the general partners managing such funds to contact PNT at (303) 333-2324 or to email PNT at deals@pntcapital.com.
PNT REAL ESTATE SECONDARIES ACQUISITION CRITERIA
Transaction Size Criteria: Depending upon the leverage of the underlying real estate private fund in which the limited partnership interests are invested, PNT’s will purchase limited partnership interests that range from $1 million to $15 million.
Underlying Fund Investment Strategy Criteria: PNT will contemplate acquiring limited partnership interests in almost any type of real estate private equity fund including core, value-added, opportunistic and all other real estate strategies.
Geographic Criteria: The real estate assets in the underlying fund of the LP interests being acquired must be located within a top 50 metropolitan statistical area in the United States or in the Canadian cities of Vancouver, Calgary or Toronto. No other geographic markets will be considered unless there is strong demographic or economic data to support investment in that region.
Concentration Criteria: PNT will evaluate the following factors for potential over-concentration risk within any underlying real estate private equity fund including:
- Geographic concentration
- Asset class concentration
- Project-stage concentration
