Structuring public REIT-sponsored private capital fund : the case of US industrial and retail REITs

The private capital business for public REITs was started by Kimco Realty, Developer Diversified, AMB and ProLogis during the years 1998-2000, at the time when the public equity was not easily available. Over the past decade, public REITs have used their private capital funds to take out REITs' existing portfolios and newly completed projects, to finance land purchases and development pipelines, and to diversify their rental income into a fee income business. Given the limited disclosure of public REITs in their private capital funds and a lack of standardized industry terms and practice applicable to this field, this research can be described a fact-finding study. By studying each of the private capital funds managed by 7 leading REIT managers, I categorize these funds in terms of fund type, inception year, fund life, fund style strategy, investment target, geographical focus, fund terms, target leverage, key investors, parent REIT's ownership, gross fund assets, distribution frequent and incentive design. In addition, I argue that the private capital business of public REITs would not have grown successfully without fuel of the merchant development activities under the public REIT's framework. This is particularly true with respect to the industrial REIT sector. I carefully examine the case of ProLogis' business model, comprised of three indispensable pillars - merchant building, fund management and core portfolio, to substantiate this claim. By creating a new structure diagram of "public REIT-sponsored private capital fund", I demonstrate the "co-opetition" phenomenon among pension funds, real estate investment managers ("REIMs") and public REIT private capital funds in the value chain of the institutional real estate investment.

Department dc:contributor.department

Massachusetts Institute of Technology. Center for Real Estate

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2008

Author dc:creator

• Lee, Cervantes (Cervantes Chih-Chieh), 1975-

Advisor dc:contributor.advisor

• Lynn Fisher.

• Architecture.
• Center for Real Estate.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/58658

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/58658