Private Equity:

THE NEXT STEP

IN REAL ESTATE
INVESTMENT

Private Equity:

THE NEXT STEP IN REAL ESTATE INVESTMENT

P
E
T

Beyond REITs:

A BREAKTHROUGH:
INSTITUTIONAL PRIVATE EQUITY
REAL ESTATE INVESTMENTS
For your larger clients, real estate is an essential
element of a diversified portfolio, affording them
the risk protection that comes from investing in an
uncorrelated real asset class, a steady source of
income, and in many cases, favorable tax treatment.
The asset class has become more compelling
than ever, as core stock and bond investments
trade at record highs entailing
unpredictable risks, volatility and
potentially, limited returns.

have invested in REITs, a publicly traded vehicle

that affords convenient exposure, but with some
real drawbacks. This begins with their structure and
tendency to track the stock markets performance
more closely than direct real estate investments.
Add to that REITs volatility and once again, the
pure retail product is commoditized and doesnt
fulfil your more sophisticated investors original goals.
For these reasons, major institutional investors have
tended to shun these vehicles in favor of Private
Equity Real Estate investments. On account of their
high minimums, and lack of access to institutional
managers, these funds were historically closed to
individuals and families. Now, through PURUS Real
Estate Advisors, wealthy individuals and families
can invest alongside the worlds most sophisticated
institutions in Private Equity Real Estate funds. We
provide access to the same managers that major
institutional funds invest in with the same offering.
This includes the same vehicle structures as
even the largest institutions, with only a
modest additional fee.1 Its an exclusive
opportunity that can set your practice
apart and amplify your relationships
with your accredited clients and prospects.

Up until now, most high net

worth investors seeking
diversification
through real
estate

PURUS charges an administrative fee on assets under

administration, in addition to manager-level fees.

Private Equity:
THE NEXT STEP IN REAL ESTATE INVESTMENT

REITs versus Private Equity Real Estate:

WHAT YOUR CLIENTS NEED TO KNOW

REITs and Private Equity Real Estate vehicles both provide exposure to real estate, yet they are fundamentally
different. Before your clients invest, you will want to make sure they understand these key differences between
REITs and Private Equity Real Estate.
Its important to note that for the purpose of this comparison, we are discussing listed REITs. Unlisted or non-traded
REITs, which also pool investor money to invest in real properties, have been plagued by a range of issues,
including high fees and sales loads, lack of transparency about asset values, performance, and dramatic losses
for some investors.

STRUCTURED FOR A LONGER-TERM INVESTMENT HORIZON:

A REIT, or Real Estate Investment Trust, is a publicly traded fund that pools investors money to invest in incomeproducing real estate. You can check pricing and performance on a daily basis, and buy and sell trust units just
as you would a stock. The ability to trade daily adds to the price volatility of REITs as they become subject to daily
changes in investor sentiment.
Private Equity Real Estate, by contrast, is
generally structured as a limited partnership.
Through limited partnerships, your clients
are investing alongside the manager,
which is taking the same long-term time
horizon. A funds general partner pools
money from investors (limited partners),
deploys it to purchase real estate assets,
and then manages these assets over the
term of the fund. Net asset value is
determined through quarterly appraisals,
which are less volatile than prices determined
by daily trading. Private Equity real estate
investments allow their managers to take a
longer-term view on their holdings, which
can result in the realization of stronger
risk-adjusted performance over time.

Key Benefits of Private Equity Real Estate

Low correlation to traditional asset classes including REITs
Pure real estate investment vehicle
- PURUS invests with Real Estate Operators not Allocators
- Invest alongside the manager
- Manager has skin in the game as General Partner

Fee transparency
- Disclosed in offering documents

Stronger valuation standards

- Annual valuation by Independent Third Party Appraisers

Vehicle structured to outperform over investment cycles

Private Equity:
THE NEXT STEP IN REAL ESTATE INVESTMENT

LOWER CORRELATION
TO OTHER ASSET CLASSES
Nearly any form of real estate investment
can provide strong diversification benefits to
investors whose portfolios are concentrated
in traditional asset classes. However, Private
Equity Real Estate has, historically, provided
significantly better diversification benefits and
returns versus equities than REITs, which trade
in public stock markets, and as a result, are
affected by broad market movements. A study
at the Cass Business School in London found
that from 1972 to 2007, Private Equity Real
Estate, as measured by the NCREIF Property
Index, had only a 0.06 correlation to large-cap
stocks, while REITs had a correlation of 0.50.2

An Institutional Asset Class Now

Available to Your Accredited Clients
Private Equity Real Estate funds first appeared in the
1990s as a vehicle to pool the investments of public
pension funds, endowments, foundations and other
institutions for investment in real estate assets. For
most of their existence, these funds were not open to
any but the largest family offices.
Today PURUS Real Estate Advisors LLC provides
accredited investors with the opportunity to invest
with the same treatment that major institutions have,
with minimums that are accessible, and at largely the
same fee structure as the institutions.

ATTRACTIVE RISK-ADJUSTED
PERFORMANCE
Although their absolute returns have been marginally lower,
Private Equity Real Estate funds have, historically, provided
better risk-adjusted returns than REITs. Over the last five
years, for instance, the NCREIF Fund Index has returned an average
of 13.5%, versus the FTSE NAREIT All Equity Indexs 15.6%. However,
the REIT Indexs performance came at a cost of volatility that was
four times as high as for direct investment in real estate.3 In fact, top
quartile performers in the NCREIF Fund Index have returned 15.9% over
the same period on an unleveraged basis and net of fees.

FAVORABLE TAX TREATMENT

Private Equity Real Estate funds can offer significant tax advantages, since
they pay out most of their distributions as capital gains, which are taxable at
rates of up to 20%. Thats very different from REITs, which pay out substantially
all income from properties to shareholders so that it is taxed as ordinary
income at the investors top marginal rate, or up to 39.5%.

ACCESS TO INSTITUTIONAL MANAGERS

IN INSTITUTIONAL STRUCTURES
Anyone can buy a REIT. There are no requirements for accreditation or
suitability, a true retail product. The investment minimum is, essentially,
the price of a single share on the day of purchase. The PURUS Real
Estate Funds are exclusively available to accredited investors.
The Big Picture, IPE, by Stephen Lee, IPE Real Estate, September 2009
http://realestate.ipe.com/the-big-picture/30446.fullarticle
3
TIAA CREF
2

Private Equity:
THE NEXT STEP IN REAL ESTATE INVESTMENT

ACCESS TO THE VERY BEST IN PRIVATE

EQUITY REAL ESTATE MANAGERS
PURUS Real Estate Advisors LLC provides your clients, whether they are wealthy individuals, families or small
institutions, access to the same institutional Private Equity Real Estate managers as the worlds largest pension
funds. Our hand-picked managers are best-in-class and have cycle-tested expertise in acquisition, development,
and management of high-quality real estate.

YOUR CLIENTS INVEST SIDE BY SIDE WITH INSTITUTIONS

They share ownership in the same properties with the same top-flight managers. They have the benefit of the
same cost-effective fee structure with a modest additional fee to PURUS as leading global institutional
investors. PURUS does not participate in the carry or the managers share of partnership profits.

YOU OFFER EXCLUSIVE ACCESS TO INSTITUTIONAL STRATEGIES

We work with you as your partner, and in select cases, may offer possibility of providing exclusive access to our
funds within your geographic area.

OUR DISCIPLINED STRATEGY IS PROVEN BY DECADES OF EXPERIENCE

PURUS chooses managers that distribute consistent current income, provide low correlation to traditional asset
classes, generate moderate to low volatility and historically demonstrate solid risk-adjusted returns.

Private Equity:
THE NEXT STEP IN REAL ESTATE INVESTMENT

WE OFFER PROVEN STRATEGIES

TO FIT YOUR CLIENTS NEEDS

Manager Profile:

PURUS can offer a variety of Private Equity Real Estate

strategies to meet your clients objectives, including:

CORE: A low to unleveraged strategy delivering

moderate potential return with low risk. Managers in this
strategy generally invest in stable, fully leased, multi-tenant
properties within strong, diversified metropolitan areas.

CORE PLUS: A moderate-risk/moderate-return

VALUE ADD: A medium-to-high-risk and return strat-

strategy, in which the manager invests in core properties

with potential for enhancement.

egy, in which managers buy and improve properties to

add value.

OPPORTUNISTIC: A tactical high-risk/high-return

strategy in which managers buy properties that require
substantial upgrading and invest in them to attain their
full value.
Sector-focused strategies may include:

Multifamily
Office
Infrastructure

Retail
Industrial
Medical

PURUS provides you access to proven

real estate investors like Wolff Income
Partners, L.P. (WIP). Over the last six
decades, Wolff has invested in, acquired
and developed multifamily properties
with more than 20,000 units, delivering
realized gross IRRs of approximately
30.0% for its realized for-rent multifamily
investment since 2000.
Wolff focuses primarily on multifamily
properties that:

Can be purchased at a discount

Are located in markets with a

shortage of rental properties

Offer an opportunity
to raise rents

By buying undervalued properties in

promising markets, Wolffs team has
provided durable, long-term cash flow
to investors. WIP targets annual internal
rates of return of 10% to 12% net to
investors, as well as a 6% current
dividend yield upon stabilization.

WE SUPPORT YOUR SALES PROCESS

PURUS makes it easy for you to offer the best in Private Equity Real Estate opportunities to
your clients. We perform due diligence to identify top-quality managers, and
then review their strategies and organizational infrastructure thoroughly
to make sure they have the processes in place that have historically
delivered the results your clients deserve. We also provide the
tools to communicate with your clients about the importance
of investing in Private Equity Real Estate, including background
materials on this dynamic asset class, market commentary on the
sectors we invest in, and streamlined reporting and portfolio
accounting on your clients holdings.

Private Equity:
THE NEXT STEP IN REAL ESTATE INVESTMENT

PRIVATE EQUITY REAL ESTATE

CAN BE A GAME CHANGER
FOR YOUR PRACTICE
An expertise in Private Equity Real Estate investments can be a key component in your ability to add value for
accredited clients and small institutions. It allows you to gather additional assets from existing clients and attract
new clients. It positions you as a deeply trusted advisor and can increase the frequency with which your clients
recommend you to their friends and associates.
PURUS Real Estate Advisors can be your trusted partner, providing you with exclusive access to opportunities that
wealthy clients appreciate and value.

For more information about PURUS Real Estate Advisors LLC

and our Private Equity Real Estate strategies, contact:
Robert N. Baron
212-564-0027
robert.baron@purusrea.com
535 Fifth Avenue, 4th Floor
New York, NY 10017
www.purusrea.com

Date of First Use: 12/01/2015

Private Equity:
THE NEXT STEP IN REAL ESTATE INVESTMENT

535 Fifth Avenue, 4th Floor

New York, NY 10017
Copyright 2015 PURUS REAL ESTATE ADVISORS.