The GP shakeout is here:
For the past 10+ years, real estate platforms printed money.
Fees and promotes flowed. Deals were bought, sold, then bought and sold again. Everyone got paid.
But the winners are distant memories.
The losers are more recent, and they're bigger.
The margin for error is gone.
How many more times can loan maturities be delayed?
New reality:
-- GPs need capital. Not for growth, but for survival.
-- LPs hold the cash and they know it.
The GP dilemma:
-- Sell a piece of the platform to stay alive
-- Bring in a minority investor and give up a slice of the future
-- Or double down, risk it all, and hope the cycle turns
-- Every path costs something: control, upside, or legacy.
The LP opportunity:
-- Buy into the OpCo at a discount
-- Take a piece of GP economics (fees, carry, governance)
-- Or stay in the LP lane and just demand better terms
LPs can smell blood:
-- They want alignment, not just access.
-- Many want a seat at the table, not just a share of the meal.
The landscape is shifting:
-- Some platforms will recap, reset, and reload.
-- Others will fade with no capital, no deals, and no future.
Desperation is hard to hide, and stability is even harder to fake.
Put the old playbooks away for a while because this isn’t just a cycle reset; it’s a generational transfer of power and access, and today's shakeouts will have a lot to do with who is positioned to win in the next cycle.
GP investments are complicated, but shoutout to Baylor Miller Daggmill, CFA, Jennifer Wenzel, and George Z. for writing the most clear-eyed take on this topic. And kudos for PENSION REAL ESTATE ASSOCIATION (PREA) for shining a light on it. Nothing else like these perspectives out there.
PS - If you want to understand how capital, incentives, and alignment are shaped by partnership and platform structures, DM us to explore joining our upcoming FastTrack cohort. Our JV exercise puts you in the shoes of this LP/GP tension and is always voted the course favorite.
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