Leverage in Private Equity Real Estate
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