Dual Role Private Equity Ownership: Fund Types for Commercial Real Estate
Private equity funds adopting a “dual role” in hotels and commercial properties handle both capital provision and sponsorship—acquiring, executing business plans, and selling assets themselves. Randy Efron from Skylatus Property Capital explores fund variations and their trade-offs.
Types of Private Equity Funds
Funds differ in strategy and structure:
Direct Operators: Raise capital to acquire, improve, and sell properties.
Partner Funds: Co-invest with third-party sponsors via GP/LP JVs.
Fund of Funds: Invest passively in other PE funds.
Key Structural Differences:
| Fund Type | Investment Approval | Term Structure | Investor Setup |
|---|---|---|---|
| Discretionary | Manager decides independently | Varies | Fast execution |
| Non-Discretionary | Requires LP approval | Varies | More oversight |
| Open-Ended | No end date; ongoing capital flows | Indefinite | Flexible |
| Closed-Ended | Fixed investment period and capital target | Predetermined | Structured |
| Separate Account | Single investor | Custom | Tailored |
| Co-Mingled | Multiple investors pooled | Fund-wide | Diversified |
Dual Role Advantages: Speed and Scale
Pre-raised capital enables rapid closings, outpacing bidders needing LP commitments—ideal for competitive hotel deals.
Key Downside: Interconnected Performance Risk
All fund investments aggregate; one poor performer drags overall returns, impacting manager compensation and exposing LP capital broadly.
Contact Randy Efron at randy.efron@skylatus.com for PE structuring at Skylatus Property Capital .
