Sponsor types
Operator
Directly and wholly owns & operates investments
Full control of execution
Sourcing from relationships in the markets
More capital and people intensive
Fees & compensation to operator
Less common structure
Allocator
Allocates capital to operating partners who execute investments
Reliant on operating partners for execution
Sourcing from operating partners
Less capital and people intensive
Fees & compensation split between allocator and operating partners
Most common structure
Take Aways
Private real estate is the strongest diversifier (lowest correlation) to stocks
Different private real estate strategies serve different purposes
Core: Bond/dividend replacement, market-driven outcome
Value-add:Private equity-like,market hedge, active value creation
Development/Repositioning:Venture capital-like, high potential returns
A name is a name - Know what strategies are allowed in the docs
Find value-add strategies that take on limited/no development risk to preserve value-add characteristics/risk (reduced volatility & market cycle exposure)
Know your preference for allocators vs. operators