private equity real estate


  • Features Considerations for investing in private equity real estate funds relative to other forms of investment include: • Substantial entry minimums, with most funds requiring
    significant initial investment (usually upwards of $250,000 plus further investment for the first few years of the fund).

  • Strategies Private equity real estate funds generally follow core, core-plus, value added, or opportunistic strategies when making investments.

  • These professional investors either invest directly in real property with their own in-house professional investment staff or via one or more different kinds of advised investment
    arrangements, investment vehicles or products offerings specifically designed to meet the needs of institutional investors.

  • Initially institutional real estate investments were in core real estate, however, market conditions in the early 1990s led to the emergence of value added and opportunistic
    funds which aimed to take advantage of falling property prices to acquire assets at significant discounts.

  • Funds organized to meet the needs of and attract the interest of tax-exempt investors typically are structured to satisfy the qualifications of Real Estate Operating Companies
    (REOCS) or Venture Capital Operating Companies (VCOCs).

  • Private equity real estate funds may sell for opportunity or liquidity, among other reasons.

  • Types of Investors – Investors in private equity real estate (as well as investors in the other three quadrants of the real estate capital markets) include private accredited
    and non-accredited individual investors and institutional investors, as well as privately held and publicly traded real estate development, investment and operating companies.

  • Size of industry The popularity of private equity real estate funds has grown since 2000 as an increasing number of investors commit more capital to the asset class.

  • For the above-mentioned reasons, private equity fund investments are only suitable for those individual or institutional investors who can afford to have their capital locked
    in for long periods of time and who are able to risk losing significant amounts of money.

  • If a private equity real estate firm can’t find suitable investment opportunities, it typically can not draw on the investors’ commitments.

  • History and evolution There is a long history of institutional investment in real estate through direct ownership of property, through individually managed separate accounts,
    and through pooled investment funds.

  • [4][5] Secondary market Pre-existing investor commitments to private equity real estate funds purchased trade in secondary market.

  • Given the risks associated with private equity real estate investments, an investor can lose all of its investment if the fund performs poorly.

  • • Core Plus: Core plus often is confused with and/or mistaken for value added real estate investment strategies.

  • Institutional Investors – Institutional private equity real estate investors include pension funds, endowments, foundations, family offices, sovereign wealth funds, insurance
    companies, publicly traded and listed Real Estate investment Trusts (REITs), non-listed private REITs, and other forms of public or private real estate operating companies, venture capital operating companies as well as other specialized types
    of investment companies.

  • Both also typically invest in the public equity real estate markets, which includes the publicly traded, listed securities of public Real Estate Investment Trusts (REITs),
    as well as various securities issued by other forms of publicly traded real estate operating companies.

  • Investors in private equity real estate funds tend, therefore, to be institutional investors or high-net-worth individuals, and other accredited investors.

  • Private equity real estate is a term used in investment finance to refer to a specific subset of the real estate investment asset class.

  • Funds organized for institutional investors typically require investors to commit capital to the fund, and draw down on those commitments gradually and incrementally over
    the investment period of the fund as each property for the fund is acquired.

  • Private equity real estate refers to one of the four quadrants of the real estate capital markets, which include private equity, private debt, public equity and public debt.

  • Indirect Ownership of Real Property – Private equity real estate investing involves the acquisition, financing and direct ownership and holding of the title to an individual
    property or portfolios of properties, as well as the indirect ownership and holding of a securitized or other divided or undivided interest in a property or portfolio of properties through some form of pooled fund investment vehicle or arrangement.

  • Privately held Real Estate Development, Real Estate Investment and Real Estate Operating Companies – In addition, privately held real estate development, real estate investment
    and real estate operating companies also invest for their own account in the private equity real estate asset sub class.


Works Cited

[‘Institutional Real Estate, Inc.
2. ^ The Handbook of Real Estate Portfolio Management; by Joe Pagliari.
3. ^ McDonald & Stiver, Institutional Real Estate – Investment Style Categories, 2004
4. ^ Institutional Real Estate, inc.
5. ^ FundTracker;
October 2017
6. ^ CANTWELL, BRIAN (14 January 2014). “Real estate secondaries hit $5.3bn in 2013”. PEI. Retrieved 13 April 2014.
7. ^ Institutional Real Estate, Inc.
8. ^ Institutional Real Estate Asia Pacific
9. ^ Institutional Real Estate
10. ^ Institutional Real Estate Americas
11. ^ Institutional Real Estate 30 Year Anniversary Edition
12. ^ The Handbook of Real Estate Portfolio Management, Edited by Joseph Pagliaria, Ph.D.
13. ^ Modern Real Estate – An Institutional
Approach, by Stephen Roulac, Ph.D.
14. ^ Real Estate Investment 101; a video series presented by Professor Glenn Mueller of the University of Denver School of Business; produced by Institutional Real Estate, Inc.
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