what is private equity real estate 
private equity real estate is an alternative asset class composed of professionally managed pooled private and public investments in the real estate markets investing in private equity real estate involves the acquisition financing and ownership either direct or indirect of property or properties via an investment fund private equity real estate should not be confused with an equity real estate investment trust or equity reit which are publicly traded shares representing real estate investments whose revenues are mainly generated through rental incomes on their real estate holdings understanding private equity real estateprivate equity real estate funds allow high net worth individuals hwnis and institutions such as endowments and pension funds to invest in equity and debt holdings related to real estate assets using an active management strategy private equity real estate takes a diversified approach to property ownership general partners gps invest in a variety of property types in different locations which can range from new development and raw land holdings to complete redevelopment of existing properties or cash flow injections into struggling properties private equity real estate investments are commonly pooled and can be structured as limited partnerships lps limited liability companies llcs s corps c corps collective investment trusts private reits separate insurer accounts or other legal structures special considerationsinvesting in private equity real estate requires an investor with a long term outlook and a significant upfront capital commitment over 250 000 initially and follow on investments over time little flexibility and liquidity are offered to investors since the capital commitment window typically requires several years lock up periods for private equity real estate can sometimes last for more than a dozen or more years also distributions can be slow because they are often paid from cash flow rather than outright liquidation investors have no right to demand a liquidation moreover fund managers typically charge a 2 and 20 fee structure costing investors 2 of invested assets per year plus 20 of profits the following category of investor invests in private equity real estate funds created for individual investors generally require that the investment be funded at the time of the signing of the investment agreement whereas funds created for institutional investors require a capital commitment that capital is then drawn down as suitable investments are made if no investments are made during the investment period specified by the agreement nothing can be drawn from the commitment private equity real estate investing is risky but it can also provide high returns private equity real estate returnsdespite the lack of flexibility and liquidity this type of investment can provide high potential levels of income with strong price appreciation annual returns in the 6 to 8 range for core strategies and 8 to 10 for core plus strategies are not uncommon returns for value added or opportunistic strategies can be considerably higher that said private equity real estate is risky enough that investors can lose their entire investment if a fund underperforms private equity real estate funds became popular in the 1990s amid falling property prices as a way to scoop up properties as values fell previously most institutional real estate investing adhered to core assets types of private equity real estate investmentsoffice buildings high rise urban suburban and garden offices industrial properties warehouse research and development flexible offices or industrial space retail properties shopping centers neighborhood community and power centers and multifamily apartments garden and high rise are the most common private equity real estate investments there are also niche property investments such as senior or student housing hotels self storage medical offices single family housing to own or rent undeveloped land manufacturing space and more 