Real estate investing is a complex people-intensive business. Someone must find the property, negotiate the price, create marketing materials and legal documents, raise equity, manage the day-to-day activities at the property, formulate and execute the business plan, report to investors, provide K-1’s, sell the asset and distribute the proceeds. Everyone in the chain is crucial and fees are the way the team gets paid.
In real estate investment management, there are two types of fees: transaction fees, which are guaranteed, and performance-based, which are paid based on success. ...
Private Equity Real Estate Fund Transactional Fees
In a fund structure, investors commit a fixed amount of capital to the fund and start paying fees based on their commitment. Origin’s fund fees are:
1. Asset Management Fee. The asset management fee is 1.5% per year, based on committed equity. This is used to pay our acquisition and asset management team, accounting group, investor reporting, office rent and administrative staff.
2. Upfront Fees. There is a one-time upfront fee of between 1.5% and 3% of the commitment amount. This fee helps offset fund formation fees, setup and legal costs, technology, marketing, capital raising, and personnel in our investor relations department. Origin Investments bears all of these costs out of the one-time fee.
3. Administrative Fees. These fees cover fund administration, tax reporting, dead deal costs, and third-party software. They are variable costs and increase as equity is invested. They typically range between .10% and .20% per year on invested equity.
Our latest fund raise of $151 million in equity commitments for Origin Fund III will be paired with debt to acquire more than $450 million in real estate. ...
No comments:
Post a Comment