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

Co-Investment vs Direct Investment Presented by Matthew Kramer

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

Issues Inherent in Every Deal  COVID-19  Lack of diversification  Illiquidity  Risk

Deals Remain Highly Sought After 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