Investor alignment in private real estate has always been a delicate balancing act. Fees, governance structures and incentive mechanisms are designed to bind limited partners (LPs) and general partners (GPs) together over long investment horizons, yet few market participants would argue that the system is perfectly aligned. Instead, alignment is widely viewed as imperfect but functional, tested most severely when markets turn and performance disappoints.
The past three years have provided that stress test. Amid falling values, higher interest rates and slower transaction volumes, many investors have sharpened their scrutiny of fees and costs, while prompting renewed debate over whether existing structures genuinely align long-term interests or merely function adequately in benign conditions.
At the centre of this discussion sits a simple but uncomfortable truth: Fees are the most visible expression of alignment, yet they are also the least nuanced. As a result, they have
