Leverage in Private Equity Real Estate

Monday March 21, 2022


This paper reviews the scant academic literature on the use of leverage in institutional private equity real estate (PERE) investments and summarize a number of stylized facts. The bulk of available evidence supports the view that leverage, as used by high-risk PERE funds, does not adequately compensate limited partners for the risk that it adds.


Jacob S. Sagi, UNC Kenan-Flagler Business School
Zipei Zhu, UNC Kenan-Flagler Business School