Principal–Agent Issues in Real Estate Funds and Joint Ventures

Pagliari, Jr. Joseph L.

doi:10.3905/jpm.2015.41.6.021

Cited by 5 publications

(1 citation statement)

References 20 publications

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“…6 van der Spek (2017) finds quite similar differences between gross and net returns, by strategy, using a different data (comprising 440 [domestic and foreign] funds) and using a different methodology (he models, via simulation, the ex ante total [base and incentive] fees assuming differing real estate return distributions by strategy). incentive fees; however, as noted in Pagliari (2007) and Kritzman (2012), this reduction is largely a statistical illusion-as the investor essentially retains all of the downside risk.…”

Section: The Performance Datamentioning

confidence: 99%

Real Estate Returns by Strategy: Have Value‐Added and Opportunistic Funds Pulled Their Weight?

Pagliari

2017

Real Estate Economics

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Real estate strategies broadly fall into three categories: core, value‐added and opportunistic. This empirical examination of net returns from these three strategies indicates that, on a risk‐adjusted basis, the value‐added funds have strongly underperformed and the returns from opportunistic funds have weakly underperformed the returns available from core funds. In so concluding, this article departs from standard asset‐pricing models in two important respects: the total risk is used and the cost of borrowing increases as leverage increases. While the first departure has no substantive effect, the second departure lowers the estimate of the underperformance of noncore funds.

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Section: The Performance Datamentioning

confidence: 99%