Improving Alignment in Real Estate Asset Management
WRITTEN BY ZACH SCHENKER & GREG PEACOCK
The operating environment for asset managers across all industries is evolving with increased pressure and challenges. Over the last decade, there has been a strong migration from active management toward passive strategies focussed on fee minimization. Simultaneously, pension funds, sovereign funds, and high net worth individuals have been increasing portfolio allocations toward real assets and accepting liquidity premiums as a means of preserving historical returns in a low interest environment. This appetite for commercial real estate (CRE) has been welcomed by asset management firms in the industry who benefit from increased access to capital for potential projects. Such demand for real assets has created favourable deal terms for these firms featuring lucrative fee structures while contributing minimal equity.