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The private real estate industry is structured around the relationship between investors and real estate assets. Generally, there are three routes to market for investors: direct real estate investment, listed real estate securities, and private real estate funds (unlisted funds).
The routes to market are discussed in more detail during Lesson 2: Private Capital Fund Structures.
As you can see in the image above, when investing in real estate through listed securities, it involves purchasing shares in a real estate investment trust (REIT), or a listed property company.
Direct investment is the most common form of investing in real estate. Any rental income from the asset goes directly to the investor, as do any realized gains or losses from the sale of the asset. This form of investment is considered illiquid.
Distressed and debt investments can encompass similar risk and return profiles to any of the other four strategies, because the investments vary across property types.
Involves investment into distressed buildings. Key characteristics include:
Involves the origination or acquisition of loans that are secured by real estate. Key characteristics include: