The determinants of European non-listed real estate funds’ performance

The paper investigates European non-listed real estate funds’ performance between 2001 and 2014. The database uses information about 363 funds, collected from Inrev Database. The goal of this analysis is to consider how the fees charged by a fund, its leverage, size and duration impact on the performance of the fund itself.The findings suggest the existence of a negative relationship between the return of a fund and redemption fee, performance fee and management fee. On the other hand, marketing fee, leverage, size and duration have a slightly positive effect on the performance of a fund. In addition, when analysing funds separately based on their investment style, we find that leverage has a positive effect on the return of core investment vehicles, while it affects slightly negatively the performance of more leveraged value-added ones. This suggests that an excessive use of debt impacts negatively the performance of a non-listed real estate vehicle.Finally, we show how throughout the time period studied the effects of the different independent variables, included in the model, on the performance of a fund did not significantly change and they have not been affected by the spread of the GFC.