THIRD-PARTY AIFMS RESHUFFLE THE MARKET
Third-party AIFMs (Service KVGs) have become key players on the market for open-ended institutional real estate funds in Germany. Their share in the total Assets under Management and in new business has expanded quickly in recent years. This is illustrated by an analysis of BVI statistics conducted for INTREAL and the two other relevant third-party AIFMs for real estate.
In 2013, the three administration specialists mentioned above had a combined total of 4.6 billion euros in net fund Assets under Administration, which equals a market share of eleven percent. Five years later, in October 2018, the funds administrated by these three companies already totalled 26.2 billion euros. This means they had increased their net fund assets by more than five times. At the same time their market share grew to nearly one third.
THIRD-PARTY AIFMS DOMINATE NEW BUSINESS
The growing significance of third-party AIFMs becomes even more evident when looking at the new business statistics, meaning the current inflow of net cash. Between 2012 and 2017, their share of the total cash inflow almost tripled. Still at 21 percent in 2012, it reached 62 percent by 2017. After just the first ten months in 2018, it was already up to nearly 54 percent. In other words: More than half of the money that institutional investors committed in open-ended institutional real estate funds was collected by funds administrated by these three third-party AIFMs. We assume that the trend will continue in the years ahead, and that third-party AIFMs will continue to expand their share of the cash inflow. This will apply even if the inflow in 2020 falls short of the mark set by previous years.
INTREAL continues to play a key role: Since 2013, the company has accounted for between 30 to 50 percent of the cash inflow collected by third-party AIFMs. Specifically, its annual cash inflow has exceeded one billion euros since 2015 and topped two billion euros in 2017.
These trends need to be put into context with the real estate boom and the fast-paced growth of the sector. In 2009, the net fund Assets under Administration in open-ended institutional real estate funds added up to just 28.6 billion euros. By October 2018, a mere nine years later, the total stood at 87.5 billion euros. Third-party AIFMs make up a substantial share of this growth.
Apart from open-ended institutional real estate funds, third-party AIFMs also launch funds of other types. The figures above do not include the growing amounts committed to limited investment partnerships, i.e. products designed as closed-end special funds for institutional investors. Moreover, the position of third-party AIFMs in general and of INTREAL in particular is strengthened by their growing significance as administration platforms for new open-ended public funds. Funds of this type – their crisis years a thing of the past – have reemerged, showing independent and very stable performance opportunities when compared to the outlook of the institutional fund business.