Size Signals Success: Evidence from Real Estate Private Equity

Posted: 7 Oct 2015

See all articles by Sebastian Krautz

Sebastian Krautz

EBS Universität für Wirtschaft und Recht

Franz Fuerst

University of Cambridge - Department of Land Economy; University of Melbourne; City University of New York - Center for Urban Research

Date Written: October 4, 2015

Abstract

Anecdotal evidence suggests that clout and connections matter more in private equity fundraising than do actual performance. In this article, a unique real estate private equity dataset with buy-side and sell-side information is created by the authors to construct and analyze stacked interaction networks for each vintage year. Calculating and regressing centrality measures for industry embeddedness, the authors find that fund managers can benefit from their established connections to plan sponsors while fundraising. By adding fund size into the equation, they demonstrate that the total capital under management and the size of previous funds have a significant and positive effect on fundraising speed.

Keywords: Real Estate, Private Equity, Fundraising, Market Concentration, Network Analysis, Industry Embeddedness, Centrality Measures

JEL Classification: G02, G11, G23

Suggested Citation

Krautz, Sebastian and Fuerst, Franz, Size Signals Success: Evidence from Real Estate Private Equity (October 4, 2015). Journal of Portfolio Management, Vol. 41, No. 5, 2015, Available at SSRN: https://ssrn.com/abstract=2669116

Sebastian Krautz (Contact Author)

EBS Universität für Wirtschaft und Recht ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

Franz Fuerst

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

HOME PAGE: http://www.landecon.cam.ac.uk/directory/dr-franz-fuerst

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

City University of New York - Center for Urban Research

CUNY The Graduate Center
New York, NY 10011
United States

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