Real Estate Private Equity Funds: Types & Structures Explained (Discretionary, Open-Ended & Co-Mingled)

A real estate private equity fund is one of the main ownership and capital structures used across hotels and other commercial real estate. Unlike a one-off syndication, a fund can raise capital to pursue multiple investments under a defined mandate. Some funds acquire and operate properties directly, some invest alongside third-party sponsors, and others invest in other funds. Those differences matter because they affect speed, control, diversification, and risk.

At Skylatus Property Capital, we help clients think through how ownership structures and capital structures fit together. This guide goes deeper into how private equity funds are actually structured — discretionary vs. non-discretionary, open-ended vs. closed-ended, and separate accounts vs. co-mingled — and why dual-role fund structures can move quickly in competitive acquisition situations.

What a Real Estate Private Equity Fund Is (Quick Recap)

A real estate private equity fund raises capital from investors and deploys it into real estate opportunities under a defined mandate. We cover what these funds are, how they differ from a syndication, and how one firm can act as both GP and LP in our GP vs. LP guide (Part 2 of this series) — this article picks up from there and goes deeper into how funds are actually structured.

Main Types of Private Equity Funds

Not all private equity funds operate the same way. The transcript you shared outlines three broad categories that are useful to distinguish:

• Direct investment funds: These funds raise capital, acquire properties themselves, execute business plans internally, and sell or refinance those assets directly.
• Partnering funds: These funds raise capital and then invest alongside third-party sponsors on a deal-by-deal basis.
• Fund-of-funds strategies: These platforms do not directly buy properties or sponsor individual deals. Instead, they invest in other private equity funds.

Those distinctions matter because they affect control, speed, execution capability, and the degree of separation between the capital provider and the sponsor actually operating the real estate.

Discretionary vs. Non-Discretionary Funds

One of the most important differences between fund structures is whether the fund manager has discretion to make investments without going back to investors each time.

Discretionary funds

In a discretionary fund, the manager can make investments without obtaining fresh approvals from investors after capital has been committed to the fund. This can materially improve execution speed because the capital is already raised and the manager is authorized to deploy it within the fund mandate.

Non-discretionary funds

In a non-discretionary fund, the manager generally needs investor approval before committing capital to a deal. This can slow the process and reduce flexibility, especially in competitive situations where speed matters.

From an acquisition standpoint, this distinction is a major factor in how aggressive a fund can be when competing for time-sensitive opportunities.

Open-Ended vs. Closed-Ended Funds

Another major distinction is whether the fund is open-ended or closed-ended.

Open-ended funds

An open-ended fund typically has no fixed termination date. Capital can often be raised, repaid, or transferred on an ongoing basis, depending on the governing structure.

Closed-ended funds

A closed-ended fund usually has a predetermined life. It raises a set amount of capital, invests that capital during a defined investment period, and seeks to return capital over a known time horizon. Once the target fund size is reached, no new capital generally flows into the fund.

This matters because open-ended and closed-ended structures create very different expectations around liquidity, duration, and investment pacing.

Separate Accounts vs. Co-Mingled Funds

Private equity funds also differ based on the number and type of investors participating in the structure.

• Separate account: Usually involves one investor. The strategy may be highly customized to that investor's objectives, risk tolerance, and mandate.
• Co-mingled fund: Includes multiple investors contributing capital into one pooled investment vehicle.

This distinction influences governance, customization, and how closely the investment strategy can be tailored to one capital source.

Can Individual Investors Access Real Estate Private Equity Funds?

Most institutional real estate private equity funds — direct investment funds, partnering funds, and fund-of-funds structures — are built around accredited or institutional capital, with minimum commitments and reporting requirements that reflect that audience. That said, individual investors are not entirely excluded from this space. Accredited individual investors can sometimes access co-mingled funds or partnering-fund structures alongside institutional LPs, and some sponsors offer smaller-check feeder structures into larger vehicles. The tradeoffs are the same ones described above: less control, exposure to portfolio-level risk across the fund's other investments, and liquidity terms set by the fund rather than negotiated deal-by-deal, as in a single-asset syndication.

Private Equity Fund vs. Syndication

We cover this distinction in detail — including a full side-by-side comparison table — in Part 2 of this series. In short: a syndication is usually organized around one deal, while a fund deploys capital across a broader mandate.

Why Dual-Role Funds Can Act Quickly

One of the biggest advantages of a dual-role private equity fund structure is speed. If the fund is already sitting on committed capital and the manager has discretion to deploy it, the platform can act much faster than a competing bidder who still needs to raise cash from investors before closing.

That speed advantage matters in commercial real estate and especially in hospitality, where execution certainty can determine whether a sponsor wins or loses an opportunity.

In practical terms, a dual-role fund manager may be able to:

• Move faster in acquisitions
• Present greater certainty of execution
• Avoid fundraising delays
• Operate with tighter internal control over the investment process

The Downside of Portfolio-Level Risk

The tradeoff is that investments inside a fund are tied together. If the manager makes a poor investment, that underperformance can affect the broader fund rather than just one isolated deal.

This creates two important consequences:

• For the fund manager: Compensation is often tied to overall fund performance, so one bad deal can weigh on the economics of the entire vehicle.
• For the investors: More capital is exposed to the manager's broader investment decisions rather than being allocated one deal at a time.

That does not necessarily make the structure bad. It simply means that manager selection, mandate discipline, and underwriting quality matter enormously in fund investing.

How This Applies to Hotel Ownership Structures

This topic applies across many asset classes, but it is particularly relevant in hospitality. Hotels are more operationally intensive than many other property types, so the speed and control advantages of a discretionary, dual-role fund can be meaningful.

A platform that both controls capital and drives execution internally may be better positioned to act decisively on acquisitions, renovations, repositionings, and eventual exits. That is one reason private equity capital remains highly relevant in hotel financing and broader ownership strategy.

How Skylatus Helps Clients Think Through These Structures

Ownership structure and capital structure are closely connected. The right debt and equity approach depends not only on the property and business plan, but also on who controls the capital, who controls the execution, and how the investment is being capitalized.

At Skylatus, we help clients think through the full picture: debt, equity, control, execution, and timing. Whether the situation involves direct sponsorship, a syndicated structure, or more institutional capital, our role is to help align the structure with the actual investment objective.

For more perspective on how Skylatus approaches complex transactions, review our closed deals and selected case studies.