Real estate private equity is a term used in financing investments to refer to a particular part of the class of real estate investment assets. Private equity private property refers to one of four quadrants of the real estate capital market, which includes private equity, private debt, public equity, and public debt.
Video Private equity real estate
Overview
Direct and Indirect Ownership of Real Property - Private real estate equity investments involve acquisitions, financing, direct ownership, and title ownership for an individual property or property portfolio, as well as indirect ownership and hold securities or other interests whether or not divided into property or portfolio of property through some form of vehicle or investment arrangement of merged funds. These can usually be structured as individually (or separate) managed accounts, multiple funds, real estate holding companies, real estate holding companies, actively managed real estate operating companies or similar types of structures.
Investor Type - Investors in real estate private equity (as well as investors in the other three quadrants of the real estate capital market) include individual and institutional investors accredited and unaccredited, as well as private real estate development, investment and operations firms owned and sold by the public. (Institutional investors include organizations that manage money professionally for the benefit of third parties.)
Individual Investors - Individual investors include fully accredited investors that meet the minimum earnings and net worth requirements set by the SEC, and unaccredited investors who do not meet those requirements. Both accredited and unaccredited investors participate in direct investments in real estate, either individually or through non-securities partnerships. Both also typically invest in public real estate equity markets, which include publicly listed, securities from Real Estate Investment Public Investment (REITs), as well as various securities issued by other forms of publicly traded real estate operations firms. Except for some exceptions, illiquid, non-commercial real estate securities offerings are usually only suitable for fully accredited investors. Accredited investors typically include moderate to high net worth wealth investors who can meet the conformity requirements of this offer. The private placement of real estate securities is exempt from registration with the SEC, and the issuer of this security is prohibited from making a public solicitation for this offer.
Institutional Investors - Private equity institutions real estate investors include pensions, endowments, foundations, family offices, state property funds, insurance companies, registered and registered Real Estate Investment Investment (REIT), private companies that do not registered REIT, and other forms of public or private real estate operating companies, venture capital operating companies as well as other types of specialized investment companies. These professional investors invest directly in real property with their own professional investment staff or through one or more types of suggested investment arrangements, investment vehicles or product offerings specifically designed to meet institutional investors' needs. These arrangements are typically arranged, structured and managed by a professional, third-party professional real estate investment management company, for a fee.
Real Estate Development privately managed, Real Estate Investments and Real Estate Operations Companies - In addition, private real estate development, real estate investments and real estate operations firms also invest for their own accounts in private equity sub class real estate assets.
Property Types - The most common property types are offices (suburban, urban, garden and tall), industry (warehouse distribution, research and development, and office space/bending industry), retail (shopping centers, neighborhood and community shopping centers and power centers), and multifamily (apartments - both parks and tall buildings). In addition, some private equity investors invest what they typically call a special type of property, including hotels, student housing, senior housing, self-storage, medical office buildings, single-family housing, single-family housing for rental housing, manufacturing facilities, has not been developed for any of the above uses, vineyards, production houses, special tree houses, and other niche type properties.
Vehicle Structure - Investment funds collected can be arranged as limited partnerships, limited liability corps, C-corps, S-corps, collective investment trusts, private real estate investment trusts, separate insurance company accounts, and a number of structures other laws. Funds held to meet the needs and attract tax-free investors are usually structured to meet the qualifications of Real Estate Operations Companies (REOCS) or Venture Capital Operating Companies (VCOCs).
Maps Private equity real estate
History and evolution
There is a long history of institutional investment in real estate through direct property ownership, through separate accounts managed separately, and through joint investment funds. Initially institutional real estate investments were in core real estate, however, market conditions in the early 1990s led to the emergence of value-added and opportunistic funds that aimed to take advantage of the decline in property prices to acquire assets at significant discounts. Private equity real estate emerged as an independent asset class at the beginning of the 21st century and has experienced great growth in recent years.
Strategy
Private real estate equity funds generally follow core, core-plus, value-added, or opportunistic strategies when investing.
- Core: This is a riskless return strategy, low/low risk with predictable cash flow. These funds will generally invest in a stable, fully rented property, typically class A, single or multi-tenant in a strong and diversified metropolitan area, often in gateway cities.
- Core Plus: Core plus is often confused with and/or false for value-added real estate investment strategies. The term "core plus" was originally defined as "core" plus leverage, or leverage core. Leverage for the core plus strategy usually lies in the range of 20% to 30% (or lower).
- Added Value: This is a medium-to-high/medium-to-high-return strategy. It involves buying land or under rented or misplaced property, improving it in some way, and selling it at the right time to make a profit. Property is considered an added value when they show management or operational issues, require physical repair, and/or suffer capital constraints. Value Added strategies are typically used between 40% and 60%.
- Opportunity: This is a high/high risk strategy. Property will require a high level upgrade. This strategy may also involve investments in development, raw land, and special property sectors. Some funding opportunities will also be invested in public or private debt instruments surveyed or non-securities, with the objectives of privatization, repackaging, restructuring and then selling these interests. Investments are tactical, and may also include financial arbitration strategies or strategies that focus on stretching or completing complex financial structures or large, incorrect portfolios. An opportunistic strategy can use leverage levels of up to 60% or higher.
Features
Considerations for investing in private equity real estate funds relative to other forms of investment include:
- Substantial minimum earnings, with most funds requiring significant initial investment (usually over $ 250,000 plus further investment for the first few years of funding.
- Investments in combined real estate investments are referred to as "illiquid" investments that are normally expected to obtain premiums on tradable securities, such as stocks and bonds. Once invested, it is very difficult to gain access to your money because it is locked in a long-term investment that can last up to twelve years or even longer. Distribution is made when available forms of cash flows and dispositions, simply because investments are converted into cash; investors usually have no right to demand that distribution or sale be done.
- Funds set up for individual investors usually require that the subscription agreement be funded at the time the subscription agreement is signed. Funds held for institutional investors usually require investors to capitalize on those funds, and withdraw those commitments gradually and gradually over the investment period of funds as each property for funding is obtained. If a private equity real estate firm can not find suitable investment opportunities, it usually can not take advantage of investor commitments. If the manager can not find the appropriate property during the investment period stated in the circular funding offer, the fund manager will almost always be required to give up the capital commitment without a commitment at the expiration of the stated investment period. Given the risks associated with private real estate equity investments, investors may lose all of their investments if funds are performing poorly.
For the reasons mentioned above, private equity fund investments are only suitable for individual investors or institutions that can have their capital locked for long periods of time and which can risk losing significant amounts of money. This is offset by the potential benefits of annual returns, which can range between 6% and 8% for funds pursuing core investment strategies, between 8% and 10% for core plus strategies, between 8% and 14% for funds pursuing value-added strategies , and between 18% and 20% (or higher) for funds pursuing an opportunistic investment strategy. Investors in private equity real estate funds tend to, therefore, to be institutional investors or individuals of high net worth, and other accredited investors.
Industry size
The popularity of private equity real estate funds has grown since 2000 as more and more investors are doing more capital into asset classes.
Private Equity Real Estate is a global asset class and is worth more than $ 4 trillion in aggregate. Approximately 42% of the capital collected over the past two years is focused on the US property market, 40% focus on European property markets and 10% targeting the Asia Pacific property market and 8% worldwide.
Secondary market
The pre-existing investor commitment to equity funds for private real estate buys trade in the secondary market. Private real estate equity funds can be sold for opportunities or liquidity, among other reasons. The secondary broker actively focuses on the secondary market for trading syndicated shares, real estate funds and other alternative fund investments. The secondary market of real estate has grown in recent years to about $ 5.3 billion in 2013.
See also
- Real estate
- Real estate transactions
- Private equity
- Taxation of Private Equity and Hedge Funds
- Trust of real estate investing
- Trust Australian real estate investments
References
Source of the article : Wikipedia
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