PERE 50 and SEC Registration

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.

It’s a full boat this year. All 50 are (1) registered with the SEC as an investment adviser, (2) registered as an exempt reporting adviser, or (3) operate completely overseas outside of SEC jurisdiction.

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.

It looks like the “register” side of the debate has overwhelming won for the largest firms.

PERE Methodology

The PERE 50 ranking “measures private equity real estate firms by equity raised over the last five-year period. For this year’s ranking, the relevant period runs from January 1, 2013, to end of March 2018. Qualifying equity is raised for direct real estate investment through closed-ended, commingled real estate funds and co-investment vehicles that sit alongside those funds. The firm must have discretion over the fund’s capital, meaning club funds, separate accounts and joint ventures are excluded from the ranking. Further, as a ranking of private equity real estate firms, only funds with value-added and opportunistic investment strategies qualify. Strategies such as core and core-plus, as well as those not focused on direct real estate, like fund of funds, debt funds, and funds where the primary strategy is not real estate focused, such as general private equity, are excluded.”

Sources:

• PERE 50 Property’s loftiest managers
• Private Equity Real Estate Top 50 – 2016 Edition of Who is Registered
• Private Equity Real Estate Top 50 – 2015 Edition of Who is Registered
• Private Equity Real Estate Top 50 – 2014 Edition of Who Is Registered
• PERE 50 2013 Edition: Private Equity Real Estate 50: Which are Registered with the SEC?
• PERE 30 2012 Edition: Private Equity Real Estate Top 30 – 2012 Edition
• PERE 30 2011 Edition: Which Real Estate Fund Managers are Registered with the SEC?
• Is a fund manager is an investment adviser? – prior post on Compliance Building
• Is real estate is a security? – prior post on Compliance Building