Limited partners (LPs) in real estate private equity (REPE) investments are expressing significant concerns about the management and transparency of their investments. Many LPs are requesting redemptions and avoiding consecutive deals with the same sponsors due to issues such as paused distributions, lower-than-expected returns, and potential mismanagement or fraudulent activity. General partners (GPs) are being criticized for not clearly disclosing the risks associated with investments, particularly those made during the zero interest rate policy (ZIRP) period of 2021-2022. Promised returns of 8% have often materialized as low as 2%. Some GPs have admitted to the high-risk nature of these investments, but LPs argue that this information was not adequately communicated at the outset. The situation has led to lawsuits and increased scrutiny of GPs, with some LPs feeling misled about the safety and performance of their investments, especially those involving floating rate debt.
LPs - when you were pitched these RE opportunities in 2020 - 22, did you GP say to you: "There's a very realistic chance, just because it's normal and happens to the best of them, that we're going to hand back the keys to this property in a couple of years." Lots of people are…
A lot of accounts I follow currently under some scrutiny from @LPWhisperer Here is what I don’t understand. If the whole criticism is they are decieving or underperforming investors, isn’t this laid out in contract at sign on? I would imagine these contracts are pretty…
Not sure which of these 3 is the most ridiculous: 1) real estate is not high-risk high-reward 2) floating rate debt rips off LPs 3) GPs/LPs aren’t partners I could make a strong case for each one but the fact that the P stands for Partner makes it tough to beat. https://t.co/BiSWbAuiQ8
If you're an LP and a GP pitched you a venture-risk profile, venture-return RE investment in the past couple of years please let me know or us know. I'm seeing a lot of talk about that today. But in 2020-2023 all I heard was about no-risk or very low-risk coupons.
Victim blaming. But also, a very clear position. In his post, Ryan says "I also think that “sophisticated” investors should not cry if they invested into a 3% cap rate 80’s MF project with floating rate debt. You need to be more sophisticated!" As I've said before, the GP / LP… https://t.co/J4xG5fWhy2
I’ve heard hundreds of RE pitches to Retail and have seen thousands of decks: Almost no one’s says what I’ve been hearing from the push-backers all day: “Real estate is a very risky business. If we bought in 2021 we’ll most likely lose your money. If we bought with floating…
The X GPs are trying to tell you that the investments they pitched you as: An almost no-risk cupon that will perform no matter the interest environment backed by the best prime real estate and yielding 8% are now Highly-volatile risky venture investments they have been…
Besides paused distributions, which we're hearing are no big deal (ghostlighting nonsense), what else is a big warning sign that you might never see your money again? Capital that is not deployed but you have not been informed about it. Lawsuits against your GP that you have…
Strongly agreed with this writ large and have said this before, but would also add: it’s not, like, a crazy ask for LPs to take some responsibility for market timing. In fact, I’d argue it’s the one real LP responsibility. Syndicators will be raising in every environment. https://t.co/vTECVoAXrf
GPs would be much more credible if they just told LPs: "This is too rich for you blood. I'm afraid your investment in our deal is going to stretch you too thin and stress you out too much." Good GPs, including a few on here, say things like this all the time. But many more…
A lot of LPs are saying some version of this about their REPE investments / syndications: "I completely understand running into a market cycle, but this seems to be outright mismanagement if not fraudulent activity." A lot of this.
Paused distributions, lost equity, and bad deals in general aren’t exclusive to the people on this app. It’s happening everywhere. I mean everywhere. Even the firms that are considered the best of the best. If you bought in 2021/22, chances are the deal isn’t in a great spot,…
A lot of GPs are saying now that "these are risky investments." If you're an LP, besides the fine print in the docs, did the X GP tell you: "I'm buying in 2021. We're in ZIRP. Of course this is a risky investment and I've only done RE for 4 years and this asset class for 2…
What's the real issue with 'paused distributions' and the possibility of losing the LP's principal and distributions that were supposed to reflect an 8% yield but came in at 2%? That in almost all cases, the social media GPs did not really disclose this to their LPs. Not clearly…
How I know what I'm doing is helping? LPs are asking for redemptions. They're not investing in consecutive deals with the same sponsor. They're warning their friends to stay away from Huber and others. They're asking for detailed financials and threatening lawsuits if they don't…