Addressing 'A Very Big Problem in the Marketplace'

“What we’re trying to provide is an efficient marketplace,” says Real Liquidity’s Kevin Guy.

NEW YORK CITY—“The problem is enormous with regard to liquidity,” Real Liquidity CEO Kevin Guy says of the private commercial real estate investment market. “Through our own research, we think that seven or eight out of 10 of these syndicates require liquidity at some point in their life cycle. When you’re dealing with an asset class that’s somewhere in the $5-trillion to $8-trillion range, it’s a big number, and it’s a very big problem in the marketplace.”

The “very big problem” is the inability of general and limited partners to exit a fractional ownership in a syndicate quickly or efficiently. Limited partners may approach the general partners and ask about buying out their share. Failing that, “they would have to go out into the market—by which I mean their cousin Joe—and say, ‘Would you be interested in taking out my position?’” Guy says. “This of course is very inefficient, and in almost every case they take a significant discount. What we’re trying to provide is an efficient marketplace, where there’s not a single investor that may be interested—there could be tens, hundreds, and in the future there could potentially be thousands that are interested in that particular limited partner position.”