LBO returns today in comparison to RE
I come from a real estate background and interviewing with a company who wants to get into real estate, but has traditionally been in the lbo space.
For my general knowledge, what sort of returns are investors looking for these days in the LBO space? I know riskier deals will require a greater return but an overall range would be helpful. Trying to understand how that would compare to core/core+/opportunistic returns in real estate.
Thanks
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Real estate can vary quite a lot, really depends on the asset, if its (say) commercial real estate, residential (e.g., apartments), student accommodation, data centres, warehouses.
Ranked: Real Estate Return on Investment by Sector (2012-2021) (visualcapitalist.com)
Opportunistic/value add deals in RE generally require a +20% IRR. Confused what you're asking - do you want to know common LBO or RE returns?
LBO. Sorry I think I should have been more clear there.
not a direct answer, but if you're looking for history IRRs/MoM, you can check out the CalPERS website - they report out almost everything and have their hands in a ton of different things, so should get good coverage. I believe some other equivalent funds have a similar setup, but can't name any off the top at the moment
Very helpful. Thanks!
target returns are 2.5x over 5 years in most firms (UK)
some leading funds target 3.5x internally and are happy with 3x as result
This is for LBO or real estate?
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