Can someone briefly explain the difference between a REPE firm and a REIM firm? In many cases I see the same company on top PE and top investment management firms lists (PREI, clarion, etc). I assumed these two firms and others like them are investment managers not repe?
Thanks.
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closed end fund = REPE and open end fund = RE investment management
REPE firms target risky investments and sell them as soon as they're done for the most part (generate higher returns). They injects capital to address the needs and profit after selling. Investment managers target safe investments (i.e. stable office buildings in gateway markets) and hold on to them (generate lower returns). They milk the cash flow and have a broader view (asset appreciation over the holding period). For REPE firms, the hard part is figuring out how much risk can they handle. For investment managers, the hard part is the bidding process (everyone pays a premium for these properties).
Of course I can get into the management and fund structure, but what I wrote is essentially the difference at the basic level.
I actually disagree with the commenters above. Personally, I consider real estate private equity to be a sub-class of real estate investment management. Many real estate investment managers that oversee third-party institutional capital are able to accommodate/attract investors by offering a variety of structures (e.g. commingled funds, separate accounts, direct investments, co-investments, etc.) and risk profiles (i.e. core, core+, value-add, opportunistic). In general, I think people in the industry use the two terms interchangeably, even though I'd argue that a REPE firm is a REIM firm, whereas a REIM firm is not necessarily a REPE firm.
To better illustrate my point, here's IREI's rankings of largest real estate "investment managers" based on AUM (that happens to include a bunch of REPE firms):
www.irei.com/userfiles/cms/investorReport/11/2014pfr-irei-report-us.pdf
That being said, I think it can be useful to differentiate RE PE/IM/AM firms based on how a vertically-integrated they are and b how they came to be. Some real estate owners/developers are able to build an institutional REPE/REIM platform by first delivering impressive returns to investors on deals in which they act as operating partner at the real estate level, such that institutions want to give them more money to invest in deals on which they may or may not be acting as the operating partner on the ground. On the other hand, there are more traditional institutional asset managers that see an opportunity to grow AUM by offering real estate as an alternative investment strategy.
Hope this makes sense. Interested to know if/why anybody thinks otherwise. Thanks a lot.
Many of the big Real Estate Investment Managers cover both of what you would consider REPE and REIM. You mentioned Clarion for example, they have one of the largest open-ended industrial funds in the world and a large open ended core fund which you would consider REIM. They also have a series of opportunistic/value-add close-ended funds and a student housing fund that would all be considered REPE.
Great, thanks very much everyone
Shsns
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