Private Equity Real Estate funds are typically pooled investments into a specific vehicle (fund) from outside investors called limited partners. The property fund has the activities of acquisition, financing and ownership of real estate, either directly via the fund, or indirectly (funds of funds).
The Private Equity Real Estate funds allows investors (limited partners) to benefit from ‘economies of scale’ by pooling their capital into a fund, which then has greater buying power across a broad range of property assets, thus decreasing the overall investment risk and cost base for respective limited partners.
With global real estate prices on a consistent upward trajectory and with a growing global population, real estate private equity funds are very popular, particularly in US, UK and European cities and often well-understood across global investors and limited partners.
Whilst the fund is largely considered to be illiquid with ‘lock up’ periods ranging from 3 – 7 years, private equity real estate funds offer an alternative asset class for investors seeking ‘hard’ assets, or investors that have longer term ‘buy and hold’ strategies.
There have been a number of developments in structuring private equity real estate funds for transparency. For example, UK limited companies and LLPs are often used as funds in that investors (limited partners) would receive shares in the UK registered company and the company would ultimately make the acquisitions of properties. This not only gives the investors first legal charge on the assets, but also offers a transparent and tax efficient model for limited partners.
The category of limited partners include;
- Institutional Capital
- Professional Investors
- High Net Worth individuals (HNWs)
- Family Offices
Real Estate Private Equity Investment Types
Private equity real estate funds are particularly common where property becomes available in;
- Special situations (For example, vendor goes into insolvency), where a relatively quick sale is required.
- Property developments may be partially completed and require additional funding to complete the project(s).
- Require development finance to extend an existing property.
- Nonstandard property developments
- Urban regeneration property projects
Since 2008-9, a number of lenders and private financiers have changed their underwriting and lending criteria, ranging from restricted loan to value (LTV) to protect against potential write downs to limited exposure on property projects. This can create challenges when purchasing non-standard property; thus, PE real estate funds have been particularly successful in such schemes where the risk is spread across a broad range of investments.
Real Estate Private Equity - Why Vantage Ventures
Unlike other regulatory hosting platforms and European AIFM solutions, we are specialist in Private Equity Real Estate AIFM hosting solutions. Rather than be a generalist regulatory hosting platform, we offer bespoke services to private equity real estate funds, complete with integrated solutions such as custodians, fund administrators and legal support where required, offering a true ‘plug and play’ solution.
Being a true specialist, allows us to add genuine value to our private equity real estate clients, from a corporate finance advisory and capital raising point of view, to offering assistance in managing risk and compliance.
How can Vantage Ventures help with your Private Equity Real Estate Fund?
Whether you are a seasoned professional in real estate funds, or looking to launch your first fund – we offer a complete platform for private equity real estate funds that will allow you to ‘plug and play’ your real estate fund, from structuring, legal documentation, launching, regulatory cover and capital raising.
Our service include, but not limited to;
- Fund Structuring & Set Up
- Fund Offering Memorandums
- Legal Counsel/Support on Taxation, Investment Management Agreements and corporate structures for the General Partner (GP).
- Integrated Fund Administration & Auditing
- FCA Regulatory Hosting (FCA Appointed Representative)
- European AIFM/ManCo Hosting for the Fund
- European Passporting to all 29 EEA States
- Corporate Finance & Capital Raising
- Risk Management / External Risk Committee
Launching a Private Equity Real Estate Fund
We have helped launch private equity real estate funds ranging from 50 million GBP, to over 250+ million GBP for clients ranging from family offices, HNWs and institutional PE platforms. As a rule of thumb, we recommend 25 million GBP/EUR/USD to be a minimum when launching a PE fund, in order to cover the operating costs of the fund and general partner.
Some funds launch with less, however this does skew the Total Expense Ratio (TER) of the fund.