Like any business, a successful real estate enterprise requires marrying strategic vision, operational skill and capital. For a long time, one of the dominant paradigms for bringing these ingredients together has been joint ventures, which marry an operating partner’s vision and operational expertise with an institutional investor’s capital. But as the investment climate has evolved, a growing number of alternative structures have emerged. The basic theme is a push by institutional investors towards vertical integration.

This trend is fuelled by both (i) institutional investors’ desire to improve alignment with their operating partners, which is in turn driven in part by nascent judicial and regulatory hostility towards traditional restrictive covenants, and (ii) institutional investors’ efforts to capture a greater share of overall deal economics and deal flow. While most institutional investor experiments with alternative investment structures are driven by the same