Where Is the Illiquidity Premium in Private Real Estate?

Contrary to the benefit that investors have historically achieved with corporate private equity investments, private real estate funds have generally not succeeded in delivering a return premium. Yet there remains significant momentum in institutional capital targeting private equity real estate, especially value-add and opportunistic strategies. History shows that REITs have been an attractive way to make an allocation to real estate, with relatively lower-risk business models that have produced superior returns to the average private fund over full market cycles.