Real Estate News
Sequure Limited, A UK Based Firm, Launches Specialist Feeder Fund Services For Small And Middle Market US CRE Managers
Sequure Limited, a UK based firm, has launched a service focused on opening up the US real estate middle market to global investors.
At the launch of Sequure's service, Linden Booth, the COO of Sequure Limited, made the case for their offering: "The US middle market offers a compelling investment argument, however access to Mid-market CRE funds has historically been hard to come by for the global investor, requiring compliant and tax efficient feeder funds like those used by larger fund managers. Despite the obvious pool of capital sitting outside the US, the smaller mid-market US-CRE managers face strong barriers to accepting global money. With a dedicated offering, Sequure Limited is changing the market dynamics and opening the US middle market to a wider global investor base."
Sequure Limited believes the US Mid-Market provides a significant investment opportunity for global investors when combined with the right investment structure,. "US Mid-market commercial property investing generally runs in deal sizes between $20-$80 million in transaction value. These assets are generally larger than what a single family will handle on their own, but still quite a bit smaller than the large deals that the public REITs and large funds will run after. This leads to inefficiencies in the capital markets, which can offer cap rate arbitrage opportunities. This is a significant market - while mid-market real estate may only represent approximately half the total dollar value of all commercial real estate transactions, the mid-market represents almost 80% of all commercial real estate transactions."
Compliant and tax efficient investing into US CRE funds from non-US jurisdictions requires well structured feeder funds. For these smaller managers the prohibitive setup costs for Feeder Fund and navigating the extra compliance and tax requirements both locally and globally present substantial challenge. As a result, few US mid-market niche funds have feeder fund options for global investors, making investments less attractive without the tax efficiency.
Sequure's focus as a niche operator is on providing the market with the skills, expertise and capability to operate commercially viable feeder funds for mid-market US real estate investments.
"Our general offering is aimed at US managers that have interest from their own network of non-US investors, and are seeking a viable structuring solution, while our bespoke investment platform is focused on the global investor looking for mid-market opportunities that have been carefully selected through robust diligence."
Sequure Limited believes this is an evolutionary moment in US Mid-market investing, with global capital markets becoming accessible to US managers. As global investors gain easier access, the mid-market sector may start to follow the route of Private Equity and pay more attention to defining itself as a unique strategy with different characteristics to the large cap CRE market.
