HarrisCapital Advisors

Investor Solutions

Using an active management strategy, private equity real estate takes a diversified approach to property ownership. General partners (GPs) invest in a variety of property types in different locations, which can range from new development and raw land holdings to complete redevelopment of existing properties, or cash flow injections into struggling properties.

Private equity real estate investments are commonly pooled and can be structured as limited partnerships (LPs), limited liability companies (LLCs), S-corps, C-corps, collective investment trusts, private REITs, separate insurer accounts, or other legal structures.

HarrisCapital Advisors

Special Considerations

Investing in private equity real estate requires an investor with a long-term outlook and a significant upfront capital commitment initially and follow-on investments over time. Little flexibility and liquidity are offered to investors since the capital commitment window typically requires several years.

Lock-up periods for private equity real estate can sometimes last for more than a dozen or more years. Also, distributions can be slow because they are often paid from cash flow rather than outright liquidation—investors have no right to demand a liquidation. Moreover, fund managers typically charge a 2-and-20 fee structure, costing investors 2% of invested assets per year plus 20% of profits.

HarrisCapital Advisors

The following category of investor invests in private equity real estate

  • Institutions
  • Private accredited investors
  • High-net-worth individuals (HWNIs)
  • Funds created for individual investors generally require that the investment be funded at the time of the signing of the investment agreement, whereas funds created for institutional investors require a capital commitment. That capital is then drawn down as suitable investments are made. If no investments are made during the investment period specified by the agreement, nothing can be drawn from the commitment.

HarrisCapital Advisors

Private Equity Real Estate Returns

Despite the lack of flexibility and liquidity, this type of investment can provide high potential levels of income with strong price appreciation. Annual returns in the 6% to 8% range for core strategies and 8% to 10% for core-plus strategies are not uncommon.

Types of Private Equity Real Estate Investments

Office buildings (high-rise, urban, suburban, and garden offices); industrial properties (warehouse, research and development, flexible offices, or industrial space); retail properties, shopping centers (neighborhood, community, and power centers); and multifamily apartments (garden and high-rise) are the most common private equity real estate investments.

There are also niche property investments such as senior or student housing, hotels, self-storage, medical offices, single-family housing to own or rent, undeveloped land, manufacturing space, and more.

HarrisCapital Advisors

Properties we look to acquire on behalf of our investors

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High Quality Locations

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Above average national income area

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Fully stabilized properties at high cap rates

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Properties with a value add component but risk adverse qualities to the project

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