Westbrook

After a couple of months interval, I have decided to resume my blog anyhow. The last blog was traced back to the end of Sept., 2008 and since then, the property market has gone to the toilet.

However, I have found an interesting article on Westbrook on WSJ.com. It says Westbrook completed the eighth fund last year and raised an equity commitment of USD 2.5 bil. from pension funds and institutional accounts. Though the fund-raising itself was a great thing under the current market conditions, the core part of the article is that Westbrook let its investors shrink forward commitments by 10% without paying any penalty. This action certainly reflects what the market participants have seen i.e. default of LPs. Default of LPs means that LPs cannot fulfil their commitment to invest in the deals, which might cause the fund itself to cancel the deal. This phenomenon has been seen in the private equity funds. In fact, it has been heard that some LPs are selling their stakes in the secondary market at a discount to unload their commitment. This is a serious blow to the fund, partly because the funds may lose the confidence among the lender's community and partly because sellers are concerned about the capability of the funds. Something negatives has yet to be finished in the market.