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Management fee, carried interest and other economic terms of real estate funds December 2011 Derek Williams Director, Private Real Estate The jargon associated with investing in a private real estate fund is numerous. Given that an investor is signing a contract to invest in a fund, and the sponsor of the fund is promising to manage the fund in certain ways, it is not surprising that legalistic language has permeated the real estate industry. The purposes of this article are twofold: First, to provide clear definitions and insights into the main fund terms associated with most (but not all) private real estate funds. Second, to provide an overview of fund terms that have stood the test of time and to highlight those that are currently being debated in the industry. This second part involves a look at the alignment issue — how fund terms align the interests of the fund sponsor and investor. This article was first published in Real Estate Mathematics by PEI in October 20111. Request this research A note about our research Our proprietary research is made available to our institutional clients, and many of these published papers are available to other institutional investors as well. If you are not a Russell client, but are an institutional investor, we welcome you to request this research piece. We only require your contact information on a short request form. For more information about our research, please contact David or Gerry:     West Coast David Rothenberg Managing Director 866-926-5934 East Coast Gerry Lillis Director 866-459-4128 1 Williams, D. (2011, October). Management fee, carried interest and other economic terms of real estate funds. Real Estate Mathematics, 18, 203-210. ISBN: 978-1-904696-93-3. Available at: http://www.peimedia.com/remathematics. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Date of first use: December 2011 USI-11686			Printer friendly version of this page