If done correctly, joint ventures between institutional real estate investors and local real estate developers can be a “win-win” situation. By buddying up, real estate firms can expand their operating domain and deal flow, while tapping into a cheaper source of capital. Pension funds and other institutional investors benefit from access to local, property-specific expertise, which typically translates to better access to off-market transactions, better access to local vendors and better knowledge of local values. And both parties can benefit from a successful, long-term working relationship.

These advantages come into play for properties all along the risk spectrum, but the more complex the transaction, the greater value a local partner can add. Successful investment performance is becoming increasingly dependent on execution because opportunities to make money on the “buy” are diminishing as markets become fully valued. Opportunistic investments, for example, requir