The Role of Financial Leverage in the Performance of Private Equity Real Estate Funds

Alcock, Jamie; Baum, Andrew; Colley, Nicholas; Steiner, Eva

doi:10.3905/jpe.2013.17.1.080

Cited by 16 publications

(5 citation statements)

References 10 publications

(2 reference statements)

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“…We find that leverage is negatively significant with firm performance. This is consistent with previous literature such as Baum, Fear, & Colley (2012), Alcock et al (2013) and Dawar (2014). Meanwhile, growth has positive effect on firm performance, aligning with the research by Rosenbusch, Brinckmann, & Müller (2013) and Fischer & Karlan (2015).…”

Section: Jurnal Keuangan Dan Perbankansupporting

confidence: 92%

Has aggressive investing strategy performed? An insight from Malaysia listed companies

Kontesa¹,

Lim

2019

Jurnal Keuangan Dan Perbankan

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Section: Jurnal Keuangan Dan Perbankansupporting

confidence: 92%

Has aggressive investing strategy performed? An insight from Malaysia listed companies

Kontesa¹,

Lim

2019

Jurnal Keuangan Dan Perbankan

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“…Private CRE operates at slightly lower leverage than REITs on average. In a sample of global private equity funds, Alcock et al (2013) report an average leverage ratio of about 30%. Curiously, riskier funds that market themselves as opportunity or value-add have higher leverage than core funds.…”

Section: Commercial Real Estate Debtmentioning

confidence: 99%

Commercial Real Estate as an Asset Class

Ghent

Torous

Valkanov

2019

Annu. Rev. Financ. Econ.

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We survey the properties of commercial real estate (CRE) as an asset class. We first illustrate its importance relative to the US economy and to other asset classes. We then discuss CRE ownership patterns over time. While the academic literature has emphasized Real Estate Investment Trusts, about two-thirds of the value of CRE is owner occupied. We next study the return properties of CRE indices and discuss what is known about the returns to individual properties. We briefly discuss CRE debt before turning to property derivatives. Finally, we consider how including CRE in a portfolio affects the portfolio's performance.

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“…Alcock et al . () examined the performance of real estate private equity funds, as reported by Property Funds Research for the period 2001–2011. They used (fixed‐effects) panel regression models to examine the effects of market conditions and the amount and timing of leverage.…”

Section: Assessing Risk‐adjusted Performance—implementationmentioning

confidence: 99%

Real Estate Returns by Strategy: Have Value‐Added and Opportunistic Funds Pulled Their Weight?

Pagliari

2017

Real Estate Economics

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Real estate strategies broadly fall into three categories: core, value‐added and opportunistic. This empirical examination of net returns from these three strategies indicates that, on a risk‐adjusted basis, the value‐added funds have strongly underperformed and the returns from opportunistic funds have weakly underperformed the returns available from core funds. In so concluding, this article departs from standard asset‐pricing models in two important respects: the total risk is used and the cost of borrowing increases as leverage increases. While the first departure has no substantive effect, the second departure lowers the estimate of the underperformance of noncore funds.

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The Role of Financial Leverage in the Performance of Private Equity Real Estate Funds

Cited by 16 publications

References 10 publications

Has aggressive investing strategy performed? An insight from Malaysia listed companies

Has aggressive investing strategy performed? An insight from Malaysia listed companies

Commercial Real Estate as an Asset Class

Real Estate Returns by Strategy: Have Value‐Added and Opportunistic Funds Pulled Their Weight?

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