I am in charge of doing due diligence on all acquisitions/refinances for a company that buys and sells strip malls on the west coast. We are the GP on all of our deals and our LPs consist of HNWI and sometime partner with institutional investors on larger deals.
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Yes
Technically yes, but I think your firm would be more commonly classified as a "real estate investment company" or "operator".
From my experience, REPE is more commonly used to describe groups with large funds that take LP or Mezz interest in deals.
Both are REPE. There’s allocator and operator funds in the REPE world.
As I said, techically yes, but practically his group would be more commonly classified otherwise. I have found that GPs/Operators are typically not referred to as real estate private equity firms/groups - even though they techincally could fall into that category. Just being realistic.
Also, if OPs firm syndicates each deal, then it definitely would not be considered "REPE".
You can call yourself whatever you want, but common nomenclature within the industry is to call the LP side of the business PE, while the GP guys are developers/sponsors/operators.
The lines are definitely blurred though - JBG used to have huge PE funds but was very much a developer. I believe Hines has both sides of the business. I've seen lots of deals recently where the PE guys are trying to work their way over to the GP side and justify getting a piece of the promote in the wake of the 2/20 model coming under scrutiny.
Agreed, but there are layers to GP/LP. A sponsor/developer is going to be the GP with a REPE on the LP side, but from the REPE firm's perspective the partnership could be on the GP side while their investors are on the LP side on their structure. This is especially true if the REPE manages some separate accounts on the side. As everyone's mentioned the line is blurry, but my criteria for a 'true' REPE would have to meet at least 2-3 of the below:
-Closed ended funds (can have other separate accounts/open ended if there's also a fee/IM side of the operating platform) -(Mostly) discretionary -some type of value add/re-positioning or other strategic differentiation (i.e., not just buying core for cash flow/coupon cutting like a REIT) -Partnership structure internally with respect to equity participation/profit disbursement -Active portfolio management (i.e., will liquidate or manipulate allocation/position in certain funds to maximize/maintain profit)
What? The LPs are pension funds and HNWI, not Private Equity analysts. The GPs are the analysts that actually underwrite acquisitions.
What? I work on the LP side. We have multiple large funds and provide LP equity in deals. We underwrite every deal, commonly going into a deeper level detail than our GP/Sponsor.
I think you are getting confused with LP investors on the fund level, vs LP investors on the deal level.
U right, haven't started working yet so when I heard LP I thought of the people with equity in the funds, not the people operating them.
Thank you guys, I appreciate the feedback!
REPE is simply a real estate company that has a closed end discretionary fund. It really has nothing to do with GP/LP. I work for a Firm that has multiple close end funds with LPs (pension funds, sovereign wealth ect) who view us at the GP. That being we will occasional (but rarely) invest in a deal and have a development partner where we will act as the LP and the developer the GP.
If you are doing deals with a couple sources of capital, but it’s not a true close end fund it’s not REPE (open end funds I suppose can count as well).
It really doesn’t matter if you are working in REPE or not. All that matters is you are doing deals and making money.
Real Estate Private Equity has much more to do with how they raise the capital that they are investing. Very simply, REPE is an asset class that consists of private and public investments that are pooled together in order to invest in the property markets. What makes it "private equity" is the fact that the invested capital is not listed on a public exchange, but rather, is composed of institutions, funds and investors that directly invest in private companies which in turn, invest that capital in real estate.
The institutions, funds and investors committing the private investment to REPE's are generally institutional investors, accredited investors and high-net-worth individuals. Here's an article on what classifies a firm as a REPE, who invests with REPEs, and what REPEs invest their money in:
https://www.realestateanatomy.com/what-exactly-is-real-estate-private-e…
Well most of the time REPE buy property companies (platforms) and sell them when the time is right. Just check out what Blackstone did with Logicor/Nobis, etc.
This is just wrong. There are a lot of different strategies for REPE and buying platforms or companies is just one of them, typically utilized by larger shops that have traditional REPE in addition to REPE strategies. The OP is asking about REPE in the sense of funds that execute on property level strategies and there are A LOT more of these than ones that invest in entire platforms for obvious reasons.
This couldn’t be more incorrect.
REPE = real Estate private equity. Are you investing in real estate? Is the equity you’re investing private? If you answered yes to these two questions, you work in REPE
We're all arguing semantics at this point. I think, as far as this forum is concerned, most people discussing REPE mean what MonkeyWrench described.
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