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Market-Based Solutions to Vital Economic Issues
Research
Apr 5, 2016

Class Differences in Real Estate Private Equity Fund Performance

Abstract

Real estate private equity (REPE) funds are often differentiated by risk class: core, value-added, or opportunistic. Fund class is used by investors and managers to allocate funds and to describe investment policies. In this paper, we use REPE fund cash flow data from Burgiss that allow us to calculate a variety of performance metrics. For a subset of the data, we also observe characteristics of underlying fund holdings. Despite evidence that Value-Added and Opportunistic funds differ in investment composition, we show that class does not do a good job of predicting differences in performance. Unsurprisingly, greater investment in development (as assessed ex post), predicts poor performance for funds raised just before the Great Recession.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.   


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