Private RE Steps Up Co-Investment

Headquartered in London, Preqin says more funds are offering co-investment opportunities, although not all are seeing takers.

LONDON—With investors becoming more vocal about alternatives to the blind pool model, more private equity real estate funds are offering co-investment opportunities, Preqin said Wednesday. A recent Preqin survey of fund manager and investor attitudes to co-investments found that more than two-thirds of all real estate firms offered co-investments in 2016, up markedly from the year prior, while nearly half of managers will look to offer more co-investment opportunities this year.

“Private equity real estate fund managers are clearly seeing the benefits of offering co-investments, such as improved investor relationships and increased chances of a successful fundraise,” says Andrew Moylan, head of real estate products at Preqin. “Consequently, the proportion of funds that give investors these opportunities continues to rise. At a time of intense fundraising competition, with investors increasingly choosing to allocate large sums of capital to fewer fund managers, co-investment opportunities provide a perfect tool to attract investors and foster strong, sustainable and mutually beneficial relationships.” Investors surveyed by Preqin also like the sense of control over the direction of their capital that co-investments can provide, along with better returns and reduced fees.