The illiquidity premium has failed in private real estate

The illiquidity premium has failed in private real estate

Investors allocate to private equity with the expectation of achieving superior returns relative to public market investments. This approach has generally paid off in corporate private equity, with return premiums having compensated investors for the risk of illiquidity.  However, the same cannot be said for real estate private equity. In the modern REIT era, since the early 1990s, the average private real estate manager has not delivered an illiquidity premium over full market cycles. In ...

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