Is real estate private equity real estate? - Dynamic interactions between real estate private equity funds, non-real estate private equity funds, and direct real estate investments

Anderson, Randy I.; Krautz, Sebastian; Rottke, Nico B.

doi:10.1080/09599916.2016.1209781

Cited by 8 publications

(7 citation statements)

References 11 publications

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“…More broadly, there have been a number of important studies providing crucial information on the performance and characteristics of non-core real estate funds, especially since it has been established that investment style provides significant explanatory power over their performance Hoesli 2016, 2019). These studies have mainly focused on US and Europe non-listed real estate funds, (including Anderson et al 2016;Bollinger and Pagliari 2019;Fisher and Hartzell 2016;Fuerst and Matysiak 2013;Gang et al 2020;Hahn et al 2005;Kiehelä and Falkenbach 2015;Krautz and Fuerst 2015;Morri et al 2021;Pagliari 2020;Shilling and Wurtzebach 2012;Xing et al 2010), with a number of these papers drilling into specifics around non-listed real estate fund style, particularly non-core. The general research consensus is that non-core funds (i.e., value-add funds, opportunity funds) gave no discernible performance advantage over their core counterparts, plausibly due to higher fees, lesser effective management of funds (Bollinger and Pagliari 2019), and excessive exposure to leverage (Morri et al 2021;Pagliari 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

The Performance and Diversification Potential of Non-Listed Value-Add Real Estate Funds in Japan

Hoesli

Newell

Marzuki

et al. 2022

JRFM

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In the aftermath of the COVID-19 pandemic, non-core investments are gaining traction amongst institutional investors due to the shifting preference towards investment vehicles that position higher on the risk–return curve. Non-listed value-add real estate funds in Japan are one such vehicle. This research develops a comprehensive bespoke benchmark total return index using the ANREV database to reflect the performance of Japan-focussed non-listed value-add real estate funds. We compare the performance of such funds with that of other asset classes and perform portfolio and regression analyses. We conclude that there are several advantages to investing in those funds, including: (1) strong absolute total return performance, (2) competitive risk-adjusted performance, and (3) significant portfolio diversification potential in a mixed-asset portfolio context. The strategic implications for real estate investors are also assessed.

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Section: Literature Reviewmentioning

confidence: 99%

The Performance and Diversification Potential of Non-Listed Value-Add Real Estate Funds in Japan

Hoesli

Newell

Marzuki

et al. 2022

JRFM

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“…Hoesli and Lekander, 2008;Baum, 2009) have discussed the advantages that offset these disadvantages, resulting in likely excess returns, providing investors with the advantages of international diversification, the benefit of information asymmetry through access to off-market transactions, professional fund management, and an opportunity to participate in development opportunities. Anderson et al (2016) suggested that value-added and opportunistic NREFs are more closely related to direct real estate than the private equity market. There is an extensive body of literature on the past performance of NREFs (e.g.…”

Section: Literature Review 31 Non-listed Real Estate Fundsmentioning

confidence: 99%

Identifying the risk factors in Indian non-listed real estate funds

Gupta

Newell

Bajaj

et al. 2018

JPIF

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Purpose Investment in non-listed real estate funds (NREFs) in an emerging economy like India has its own challenges that entail a detailed understanding of the risks. The purpose of this paper is to identify the key risk factors across the life cycle of a NREF, based on a considered feedback of various real estate fund management stakeholders. It is important for the investors and fund managers to appreciate these risk factors to make informed investment decisions. Design/methodology/approach The present study based on the literature survey and discussion with experts identifies 39 risk attributes, which were further summarized using factor analysis into a smaller set of factors impacting NREF returns (risk). The relative importance of each risk attribute was examined and ranked using the relative importance index (RII). Further, cluster analysis using Euclidian distance was used to partition these risk attributes in various segments depending on their importance. Findings The risk attributes are summarized as five risk factors, i.e. regulatory RISK, foreign direct investment risk, entry risk, business risk and project risk. Whereas the top five perceived risk attributes are investee/partner risk, project entitlement risk, title risk, legislative and regulatory risk and project execution risk. Practical implications This study has significance to the industry practitioners and the academic community in developing an understanding of the dynamic nature of risks across the life cycle of the NREFs in India and classifying them at the macro-meso-micro levels. Originality/value This paper is one of the first attempts to understand the risks impacting NREFs in India. It will help investors develop a better strategic understanding of the risks across the life cycle of an investment.

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“…Typically, the studies compare empirical fund performances globally (Aarts and Baum, 2016; Krautz and Fuerst, 2015; Alcock et al , 2013; Baum et al , 2012) or European-wide (Delfim and Hoesli, 2016; Kiehelä and Falkenbach, 2015; Fuerst et al , 2014; Fuerst and Matysiak, 2013; Brounen et al , 2007). National studies are only existent for the US sector (Anderson et al , 2016; Case, 2015; Farrelly and Stevenson, 2016; Fisher and Hartzell, 2016; Hahn et al , 2005; Pagliari et al , 2005; Tomperi, 2010) and the UK sector (Baum and Farrelly, 2009; Bond and Mitchell, 2010; Farrelly and Matysiak, 2012; Oluwaseun Samuel and Olufolahan, 2016). This is important, because, e.g., Delfim and Hoesli (2016, p. 199) have already revealed substantial differences in national performances.…”

Section: Scholarly Debate On the Performance Of Repe-fundsmentioning

confidence: 99%

“…All existing empirical studies analyse the realized fund performance data either with indices (Anderson et al , 2016; Case, 2015; Pagliari et al , 2005) or with direct data of multiple (12 to 339) funds. Only a few studies apply the original cash-flow-data (Fisher and Hartzell, 2016; Farrelly and Stevenson, 2016; Aarts and Baum, 2016, Kiehelä and Falkenbach, 2015; Alcock et al , 2013; Farrelly and Matysiak, 2012; Kaplan and Schoar, 2005).…”

Section: Scholarly Debate On the Performance Of Repe-fundsmentioning

confidence: 99%

Performance vs prospectus = transparency in German closed-ended real estate funds?

Nadler

2018

JPIF

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Purpose The purpose of this paper is to close the transparency gap by comparing ex ante and ex post performance disclosure, thus providing important conclusions regarding the transparency of this important German market segment. Design/methodology/approach Closed-ended real estate funds (CEREFs) are one of the biggest segments of unlisted private equity funds in Germany. CEREFs have a central “profitability promise” that is based on ex ante forecasts given in the prospectus. Typically, equity is tied to these investments for up to 20-30 years, leaving investors highly insecure whether their expectations will be fulfilled and fund managers actually achieve prospected performances ex post. Findings The performance variance analysis of all German CEREFs outstanding during the global financial crisis reveals that prospect-performance disclosures as well as prospect-performance variances cause substantial problems in Germany due to overestimation biases of many fund managers. Research limitations/implications As typical for the recent scholarly debate, also the past disclosure practice in Germany prohibits a long-term performance analysis, unless researchers apply instruments of modern investment analysis like comprehensive financial plans (“Visualisation of Financial Implications)”. Practical implications The transparency developments in CEREF-reporting of the last decade deliver precise recommendations regarding the internal and external performance variance analysis, risk-profiles and stress tests for the future fund management. Social implications The introduced methodology would increase transparency in the segment of CEREF and, thus, improve investor protection. Since private households in Germany mainly acquire these funds, this is a contribution to sustainability in private asset management. Originality/value The paper develops a new methodological framework for performance measurement of unlisted funds. It then assesses for the first time the impact of transparency and trust on fund performances by applying a performance variance analysis.

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Is real estate private equity real estate? - Dynamic interactions between real estate private equity funds, non-real estate private equity funds, and direct real estate investments

Cited by 8 publications

References 11 publications

The Performance and Diversification Potential of Non-Listed Value-Add Real Estate Funds in Japan

The Performance and Diversification Potential of Non-Listed Value-Add Real Estate Funds in Japan

Identifying the risk factors in Indian non-listed real estate funds

Performance vs prospectus = transparency in German closed-ended real estate funds?

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