The ties that bind the limited partners that invest in real estate funds to the general partners that manage them have been worn hair-thin by the financial crisis. How can the two “sides” best work together now?

Before the financial crisis, it wasn’t unusual for general partners (GPs) to create funds that were targeting equity commitments of US$1 billion, US$3 billion, US$5 billion — and still be oversubscribed. Limited partners (LPs) blinded by the real estate bull market that ran through 2007 tripped over themselves to invest in funds from big Wall Street names — who sometimes said they didn’t need their money, and returned it. At times, LPs weren’t sure where to turn to maintain their allocations to real estate.

Life has, of course, been turned upside down during the past three years. A market where GPs certainly held the upper hand now squarely favors the LPs that invest with them. LPs are being a lot more skeptical, and are finding at times