Private Equity Real Estate Tips

Private Equity Real Estate Tips for Success

One of the most common requests I receive from readers is to cover private equity real estate in more detail. There is a great deal of information on real estate and private equity but very little on private equity real estate funds. I am working to fill this void so if you have any white papers, articles, videos or personal insight please contact me at Theo@peblogger.com I came across this document on private equity real estate funds. The author, Deloitte, prescribes five areas to focus on to achieve success in private equity real estate.

Attracting capital

• Build and sustain an exceptional investment yield track record.
• Build and maintain an eminent and well-regarded team of advisors, including bankers, accountants, lawyers, and other specialists.
• Obtain access to qualified investors.
• Make sure that satisfied and loyal investors receive timely and effective communications, including financial and tax reports.
• Establish, promote, and protect a brand that exudes quality, skill, and integrity.

Sourcing and qualifying investment opportunities

• Do the right things to make people want to do business with you: Demonstrate that you understand the important issues, you conduct due diligence effectively and efficiently, and you have credibility to close.
• Build an extensive network of joint venture partners who are trustworthy and skillful.

Fund and investment structuring

• Structure investments that are suitable, attractive, and efficient for domestic individuals, tax exempt institutions, and a variety of foreign investor profiles.
• Establish best practice fee structures that align your interests with those of your investors.
• Determine the right degree of leverage on investments and for the fund overall.
• Structure investments to minimize federal, state, and foreign income, and asset & transfer tax costs, thereby providing optimal after-tax yield to investors and you.

Investor reporting and operational excellence

• Develop and operate properties efficiently and effectively.
• Build and retain a skilled team at the advisor level.
• Comply with all financial and tax regulatory matters in a timely fashion.

Exit strategies

• If desired, effectively recycle capital within a fund.
• Correctly gauge ideal timing for closing a fund and starting a new one with the same investor group.

Source

The preceding advice is from Deloitte and is not necessarily suggestions from this website, please see a qualified legal consultant.

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Alternative Real Estate Investment

Areas of Alternative Real Estate Investment

Private Equity Info looked at institutional investors with a specific focus in real estate and separated them by the type of real estate they invest in. Those included in the module are: real estate investment trusts (REITs), real estate-focused private equity firms, hedge funds and other institutions that are active debt or equity investors in the real estate market. The following is the results of this data module and shows what are the most popular real estate investments:

The latest Private Equity Blogger article on Private Equity Real Estate is Real Estate Private Equity Capital
To read more about Private Equity Real Estate please see Private Equity Real Estate Investment.
For a list of Private Equity Real Estate firms please see Largest Private Equity Real Estate Firms

Tags: private equity real estate, alternative real estate investors, alternative real estate investment, alternative investors in real estate, data private equity real estate, real estate buyouts

Real Estate Private Equity Capital

Private Equity Real Estate Funds Can’t Raise Capital

Fundraising by private equity firms focused in real estate has hit a 5-year low in the second quarter of 2009. The decline reflects nervous investors worrying that real estate values will wii continue to slide. Sixteen funds investing in real estate raised just $8.9 billion, the lowest since the Q3 2004.

Alternative asset research firm Preqin concluded, “With many investors still unable to commit new capital, and with other investors more cautious towards the market following significant write-downs in value for existing investments, fund-raising will remain an extremely challenging task in 2009.”

Fund-raisers have also lowered their targets by $28 billion over the past three months, and in some cases have shelved or abandoned their funds altogether. So far this year, 36 real estate funds have been abandoned or put on hold, compared with 25 funds in all of 2008, the report said.

Funds focused on Europe represented the biggest group in terms of value raised, with five funds raising a total of $5.3 billion. That’s down from 12 funds and $9.2 billion a year earlier. About 3.1 billion euros ($4.32 billion) of that was attributed to the Blackstone Real Estate Partners Europe III, the largest fund to close so far this year, Preqin said. Nine funds focused on the United States raised $3.2 billion, paling in comparison to the 31 funds that raised $17.5 billion in the 2008 second quarter.

Read more…

To read more about Private Equity Real Estate please see Private Equity Real Estate Investment.
For a list of Private Equity Real Estate firms please see Largest Private Equity Real Estate Firms

Tags: private equity real estate firms, private equity real estate, private equity real estate funds, private equity real estate investments, private equity real estate management, real estate buyout funds

Private Equity Real Estate

List of Largest Private Equity Real Estate Firms

The Private Equity Real Estate Magazine reveals the PERE 30, the top thirty private equity firms investing in real estate. The combined total raised by all thirty private equity firms was $190 billion over the last five years. The Blackstone Group and Morgan Stanley Real Estate topped the list, together the two firms raised more than $36 billion in the past five years.

The associate editor of the PERE Magazine commented “With real estate growing rapidly as an institutional asset class, these 30 firms are primed to continue growing at a tremendous rate and influencing real estate markets around the world.”

Here is the list of the largest private equity real estate firms:

1. The Blackstone Group
2. Morgan Stanley Real Estate
3. Tishman Speyer
4. Goldman Sachs Real Estate Principal Investment Area
5. Colony Capital
6. Lehman Brothers Real Estate
7. The Carlyle Group
8. ProLogis
9. Beacon Capital Partners
10. LaSalle Investment Management
11. MGPA
12. AEW
13. Rockpoint Group
14. Apollo Real Estate Advisors
15. CB Richard Ellis Investors
16. RREEF Alternative Investments
17. Grove International Partners
18. Shorenstein Properties
19. The JBG Companies
20. Citigroup Property Investors (CPI) Capital Partners
21. JER Partners
22. Walton Street Capital
23. Heitman
24. Aetos Capital
25. KK daVinci
26. Lubert-Adler
27. Starwood Capital
28. Fortress Investment Group
29. DLJ Real Estate Capital Partners
30. RLJ Development

Permanent Link: Private Equity Real Estate List

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Private Equity Real Estate

Private Equity Investment in Real Estate

Private equity investment in real estate has increased in recent years, here is an overview of private equity real estate:

Private equity real estate is a sometimes risky, but often lucrative investment area that has become increasingly popular in the last few years. Private equity real estate typically involves a private equity firm collecting money from investors to create a private equity fund, which then looks for potentially profitable real estate to purchase. The private equity fund creates a portfolio of real estate investments that the fund manager believes will be relatively low-risk while still lucrative.

Private equity real estate funds three major investing strategies:

1. Core-Plus: This strategy is generally low risk with low returns. The Core-Plus strategy involves investing primarily in core properties, with a small amount requiring some form of enhancement.
2. Value Added: This strategy usually generates higher returns than Core-Plus, but carries greater risk. The idea is to buy property, make some improvement on it to raise the property’s value and then sell it at a higher price than originally purchased. Value-added improvements range from solving management/operational problems, physical improvements, or solving capital constraints.
3. Opportunistic: This approach is generally the riskiest, but sometimes the most profitable. The opportunistic strategy usually involves investing in properties that require a high degree of improvement and other more risky potentially profitable real estate investments like raw land and niche property sectors.

Drawbacks to Private Equity Real Estate

• High Entry Fee: Due to the substantial amount of capital needed for investing in real estate many funds require very large minimum investments.
• Low Liquidity: Private investment in real estate requires investors to have limited access to their money because it is locked up in long-term investments. Some real estate investments can last more than ten years while the property is improved.
• Volatility: As recent failures in the housing market demonstrate, the real estate market is subject to both boom and bust cycles. For investors the real estate market is sometimes incredibly profitable but there is also a high degree of risk as housing prices can fall and the fund can fail.

The private equity real estate industry has increased in size since 2000. While the housing crisis has hurt many in the financial industry it has also led to very cheap real estate that private equity funds are purchasing for huge profits.

Permanent Link: Private Equity Real Estate

Tags: Private equity, private equity investment in real estate, private equity real estate, private equity investing in real estate, private investors real estate, private investing real estate, definition private equity real estate