Private Equity Real Estate (PERE) vs Equity Real Estate Investment Trust (REIT): Unraveling the Distinctions

by Godrej Properties Limited

650

2

Both Real Estate Investment Trusts (REITs) and private equity real estate (PERE) belong to the wealth-building asset class, standing as an alternative to conventional real estate investing. Private REITs and private equity real estate companies are the two most popular options for investing in private commercial real estate. Just like with any significant financial choice, it's critical to thoroughly examine and comprehend all factors before making an investment. With that in mind, let's dive a little deeper into PERE Vs REIT, the biggest differences between a REIT and private equity real estate investments. 

PERE Vs REIT: Key Differences

Liquidation

When it comes to PERE Vs REIT, how fast you can get your money back, as cash, forms a major differentiating factor. Publicly traded REITS can be bought and sold easily since they are liquid. The opposite applies to private equity real estate investments. 

Public Trading

REITs are publicly traded and are subject to stricter regulatory requirements and often not permitted to invest in certain types of assets. There is no market for the exchange of interests in private equity real estate companies because they are non-traded.

Minimum Investments

Compared to private real estate investments, REITs often have lower minimum investment requirements. The initial minimum investment in a private equity sponsor often ranges from $25,000 to $100,000 or more in some circumstances.

Returns

Target returns are heavily influenced by the company you've chosen to invest with and how they go about producing returns for their investors. You may expect 8-10% for REITs and PERE is subject to significant swings depending on whether you're investing in a company or a specific asset.

Ownership

In REIT, the investor is one of many who pool their funds and entrust the management group with the task of managing the funds. In PERE, ownership depends on fund structure and syndicated deal structure. 

Conclusion: Which is the Better Investment Option?

Both private equity real estate and real estate investment trusts are superior, organised capital pools in real estate investments. There is no absolute right or wrong choice. Instead, thoroughly examine the specifics of their structures to determine which best suits an investor's requirements and preferences. While REITs can be accessed by investors of all income levels and degrees of experience, PEREs are better suited for asset managers. Get in touch with your financial advisor right away to find out if a PERE or a REIT is the best option for you.


FAQs

Q: Are REITs less risky?

A: REITs may be viewed as a less risky investment because they often invest in properties that are already of excellent quality and do not require much work. Nevertheless, the returns may be lower as a result.

Q: Which is the better investment?

A: It depends on an investor's liquidity preferences, time horizon, risk tolerance, net worth, and investment plan. For instance, it can be different for non-accredited investors and accredited investors. 

Previous Post
Next Post