Co-Investment vs Direct Investment Presented by Matthew Kramer - - PowerPoint PPT Presentation

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Mar 07, 2023 13 likes •63 views

Co-Investment vs Direct Investment Presented by Matthew Kramer Everyones Looking for a Deal Returns over the last 25 years (end of March 2019): Private Commercial Real Estate Properties (long-term) 9.4% REITS 10.5%

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Presented by Matthew Kramer

Co-Investment vs Direct Investment

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Everyone’s Looking for a Deal

Returns over the last 25 years (end of March 2019):
Private Commercial Real Estate Properties (long-term) – 9.4%
REITS – 10.5%
S&P 500 – 9.8%

Source: National Council of Real Estate Investment Fiduciaries

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COVID-19
Lack of diversification
Illiquidity
Risk

Issues Inherent in Every Deal

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Fees…

Acquisition Fees (1% to 5% of the purchase price depending on the deal size and complexity)
Real Estate Developer Fee (3%-5%)
REITs – Base Fee (.25% to .5% of property value), Performance Fee (based on income and profits),

Acquisition Fee (1%), and Divestment Fee (.5%)

Promote or Carried Interest (20%-30%) (after return of capital and preferred return to Limited Partners)
LPs often have restrictions from their underlying investors forcing them to cap out at 90% or 95% of

the required equity in a project, thus creating a dislocation in the market.

Under a 90% / 10% contribution scenario, the GP must come
Family Offices

Deals Remain Highly Sought After

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