Real estate closed ended funds are funds that have particular characteristics in terms of their duration, size and liquidity. The major characteristics of these funds as defined by the the European Association for investors in non-listed real estate funds INREV, are the following:
1. The maximum amount of total capital contributions that can be accepted is set upon the establishment of the fund. This maybe determined as a basic target size with the option of an additional amount that may be pursued by the manager of the fund if there is demand by investors.
2. The fund has a pre-determined finite maximum life. This may be determined as a basic time horizon with the possibility of extension up to the pre-determined maximum life at the discretion of fund manager in order to optimize exit strategies. Usually, there is a first closing for initial equity commitments. The final closing sets the end of the any further capital raising efforts.
3. There is limited liquidity as redemption of investors interests occurs upon the termination of the fund or at interim periods of over 12 months notice; however, investors wishing to cash out may sell their interests to other investors after the approval of course of the fund manager