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- April 1, 2011: Vol. 5, Number 4

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Natural Selection: The Real Estate Fund Model Is Not Broken, But Must Evolve If It Is to Survive

by Richard Lowe

Scientists may disagree about what exactly caused the extinction of the dinosaurs, but it is safe to assume that it was some kind of global catastrophe, such as a meteorite strike followed by never-ending, freezing winter. Read enough gloomy financial headlines and you might start believing that a similar story is unfolding for the real estate fund management industry. The Blackstone Group might be talking about raising a new multi-billion “mega-fund”, but the days of fund manager behemoths stalking the global property markets with vast reserves of investor capital are well and truly over.

Outside a small elite of operators who have proved robust during the recent crisis, many fund managers are suffering in the post–credit crunch environment — or, worse, are being eaten by larger or healthier rivals. With a few notable exceptions, the capit

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