BREAKING UP THE BUILDING BLOCKS
Buildings are getting too big to be owned by a single investor. Take an office block costing, say, [pounds sterling] 100 million and assume that no pension fund can have more than 5% of its assets in a single investment. That means only funds of [pounds sterling] 2 billion and above can buy. The less attractive investments are completely overlooked because no fund wants 100% of a secondary property. Nor is it the sort of investment you can move in and out of quickly. Property requires a long lead time to find a buyer and then to negotiate its acquisition and disposal. Break a building up into blocks which can be bought and sold separately - called unitization - and you broaden the pool of possible investors and increase liquidity.
In the United States this has been pioneered through debt and tax-based structures, including real estate investment trusts (Rockefeller and Salomon's EQK 1, both last year) and limited partnerships (Salomon's EQK 2). In the UK earlier this year there was Billingsgate, listed on the Luxembourg Stock Exchange, essentially involving the issue of securities in a single asset company, and criticized for giving investors the risk but capping their return.