- November 1, 2016: Vol. 28, Number 10

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Let’s make a deal: Investors are finding fees, terms swinging more in their favor

by Beth Mattson-Teig

Fund managers looking to kick-start fundraising momentum, build long-term relationships or land an especially “big fish” investor are willing to sweeten fund terms to attract capital.

Currently, private equity real estate fund managers are vying for capital in a highly competitive marketplace. Over the past several years, a gap has emerged as mega-funds have gotten larger and more influential, and the remaining 80 percent of funds are taking more time and effort to raise money. That competition has intensified as institutional investors continue to consolidate their commitments to smaller pools of managers. So, while most mega-fund managers have not had to compete on fees, others are offering incentives to garner capital.

Fund managers are by no means slashing prices and offering deep discounts. The shift is more subtle and is occurring on a case-by-case basis. Specific changes to terms vary widely depending on the size and type of fund. In addition, institutional

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