There are many locally entrenched operators and sector specialists with strong track records that operate below the institutional investor radar, firms that possess rich cultural diversity and entrepreneurial spirit — proven drivers of success. For many such firms, access to institutional capital has been limited to one-off transactions with allocator funds or a fairly small universe of emerging manager programs that invest primarily in commingled funds with structures that often impose untenable burdens on skilled, nimble local operators.
Ironically, comingled fund structures have even proven problematic for institutional investors who see value in partnering directly with local firms to pursue tailored real estate investment strategies, but may not have adequate resources internally to execute what many recognize to be resource-intensive strategies. For instance, many institutional investors also appreciate that most operators and developers simply lack the infrastructure and imbedded governance processes that institutional investors require which adds to the amount of management attention required.