Private Equity Real Estate has released its ranking of the top 50 real estate private equity fund managers. As I have done in the past, I parsed the list to see which managers are registered with the Securities and Exchange Commission as investment advisers. (Disclosure: my company is on the list.)
On this year’s list, 40 of the top 50 are registered with the SEC as investment advisers. Of those not registered, five are overseas, likely outside the scope of SEC registration requirements. Two of those overseas firms filed as exempt reporting advisers. That leaves five firms that are not registered as investment advisers.
There are good arguments to be made on both sides of the registration debate for real estate funds. The core requirement under the Investment Advisers Act is that the manager is giving investment advice about “securities.” Most of these real estate fund managers are truly focused on real estate and not securities. However, the discussion between what is and is not a security may be fun for the first week of your securities law class in law school. It’s not a fun discussion when trying to comply with regulatory requirements.
The PERE 50 measures capital raised for direct real estate investment through commingled vehicles, together with co-investment capital, over the past five years. This edition measures from January 1, 2010 to March 2015 for direct investment through closed-end commingled real estate funds. It excludes core and core-plus funds.
UPDATED to delete a reference to a firm that is not registered.