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Revisiting Return Profiles of Real Estate Investment Vehicles

Working paper #550
Peter Linneman and Deborah C. Moy

As a follow-up to “Understanding the Return Profiles of Real Estate Investment Vehicles” (WRER, Fall 2003, Vol. 7, No. 2), the authors take a more in-depth look at simulating and comparing return profiles of four alternative real estate investment vehicles (Core, Core Plus, REIT, and Value-add funds). Modifications from the original article include: using the Value-add vehicle net cash flows to determine the level of investments in the other vehicles; staggering investments over three years rather than assuming all capital is invested upfront; adjusting the management fee calculations; and calculating after-promote limited partner IRRs for the Core Plus and Value-add funds.

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