News
Strike a Balance, Stay Happy
June 7, 2010
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| With more limited partnerships, REITS, and funds sprouting to take advantage of the current market, it's tough for execs to strike a balance between heading a fund and making sure investors are happy, says Sagar Dalal, managing principal of Beckerman's recently formed Real Estate Fund Advisory Group, which advises RE private equity fund managers on fund formation and investor communications. Sagar tells us some fund managers aren't prepared for the amount of detail involved and reporting frequency. When LPs feel they're being kept in the dark about an underperforming investment or a shift in investment strategy, dissatisfaction can arise. The recent meltdown has led to a push for more transparency and adaptation to the changing commingled fund model, particularly in communication, control, fee levels, and governance. |
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| Investors have been burned and the relationship between GPs and LPs has soured, says Beckerman founder Michael Beckerman, who added the niche service to help his firm's clients address this. The volatile industry has led to unique challenges in raising and structuring funds, Sagar adds—he's been advising clients to make an honest re-appraisal of GP/LP alignment of interests, i.e. GPs should profit from making successful investments in the fund and not through the fees they charge. He's no stranger to the other side: He was Sterling Equities' VP of investor relations and marketing, where he was involved in private equity fundraising and formation for the firm's $600M value-add fund, and directed all aspects of investor communications, shareholder services, PR, and acquisitions and asset marketing for Sterling's five real estate funds. |
