Private Equity Real Estate Funds

Private Equity Real Estate Funds

Our years of experience as Institutional Investors in Private Equity Real Estate Funds give us the knowledge, relationships, and perspective to serve as an effective advocate for and informed advisor to the Limited Partners in real estate funds; our strong working relationship with prominent General Partners of real estate funds allows us to be a knowledgeable resource for those fund sponsors who are interested in creating or expanding a fund platform that seeks Institutional Investor capital. We are in the unique position of being able to provide a discrete menu of services to both the Limited Partner and the General Partner.

Services for the Limited Partner:

Partnership Analysis: Our clients have asked us to analyze fund terms/partnership agreements when they find themselves in a variety of situations: they may be contemplating an investment in a new fund or perhaps a follow-on fund with an existing fund manager; they may want an objective assessment of their existing fund portfolio – its current performance, likelihood of achieving its targeted return, viability of the various investment strategies, diversification of property types/geographic markets, etc. In some cases, a new team has inherited a fund portfolio and simply needs an advisor to take inventory of what they have.  Regardless of the genesis of the request, Bay Hollow has the expertise to thoroughly review each fund,  focusing on the soundness of the investment thesis, the competency of the management team, the reasonableness of the targeted returns, current/past performance, valuation methodology, and the compatibility of all fund terms against the standards of both best practices as well as that of peer funds (i.e. similar strategy and vintage). Our goal is to equip the Institutional Investor with the ability to make thoroughly informed decisions on either potential investments or existing holdings.

Advocacy Work: Given the limited internal resources with which many Institutional Investors work, Bay Hollow is able to act as an outside extension to the Investor’s staff. In this role, we can prepare the Institutional Investor for all Fund meetings – be they informal meetings with the General Partner, the Annual Investor Conference, or perhaps an Advisory Committee session. With an in-depth knowledge of the fund thesis and terms, and, if applicable, performance data ( both actual and projected), we can craft probing questions to be asked by the Investor at the respective meeting. The answers to these questions will often inform and direct the Investor’s going-forward decision-making. Should the Investor so request, a Bay Hollow representative would be willing to represent the Investor at these sessions.

In some instances, the relationship between the General Partner and their Investors may have deteriorated, and the ensuing tension can serve as a serious impediment to the constructive forward motion of the fund. Should this situation arise, Bay Hollow could serve as a mediator between the Investor and the General Partner – directly interfacing with the GP on the Investor’s behalf.

Asset Management Strategies: Once an Investor is committed to a particular fund or funds, Bay Hollow is also equipped to provide on-going asset management services: monitoring fund performance, rating a particular fund against its peer group, fashioning Investor responses to any and all General Partner requests  (investment guideline waivers/recapitalization proposals/fund term extensions, etc.). We can also perform a hold/sell analysis on a particular fund or portfolio. If this should lead to a liquidation decision, we are prepared to create exit strategies and identify likely purchasers.

Co-Investment Recommendations: As new investment opportunities are generated by virtue of an Investor’s participation in a fund, we can be a reliable sounding board. Co-investment opportunities, sourced by the fund, but too large to be fully committed by the fund, are often presented to Fund Investors on a ‘side car’ basis. The approval process for such opportunities is often accompanied by a short turn-around time. Bay Hollow can quickly analyze the opportunity and advise the Investor whether or not a new commitment on their part is financially advisable.

 Services for the General Partner:

Preliminary Analysis: The Principals at Bay Hollow can perform an in-depth review and appraisal of your business plan and make recommendations to same. The plan needs to be well thought out, executable, and appropriately staffed. It is the centerpiece of your investment thesis.

Preparation of Fund Materials: In a highly competitive fund-raising environment, all written materials describing your investment strategy, your organization, and your fund terms need to be presented in a distinctively compelling fashion. Positive … and authentic … differentiation is key to a successful capital market reception. To facilitate the likelihood of success, Bay Hollow can create all business provisions in the Fund’s materials – both marketing pieces as well as the Private Partnership Memorandum – with an experienced eye towards the needs and requirements of Institutional Investors.

Capital Markets Analysis: While Bay Hollow is not a capital raiser, we will survey current market conditions, allowing us to determine the institutional capital market’s reception to your fund. We are able to identify potential capital sources, prepare you for Investor meetings, and direct you to likely distribution channels.

Bay Hollow is a subscribing member of the ILPA 2.0 standards, and a principal created a $2 billion private equity real estate portfolio for a major Institutional Investor. Additionally,  Bay Hollow principals currently serve in both an advisory capacity to certain LPs as well as Investment Managers who sponsor both open end and closed end funds – thus ensuring real time, 360 degree perspective on all significant issues and challenges in the private equity real estate space.