We form funds for property sponsors: closed-end and open-ended vehicles, REIT and blocker structures, joint ventures and club deals, each shaped by the assets you hold and the investors you raise from.
Who owns a real estate fund decides how it is taxed. A charitable foundation owes unrelated business income tax on rent from a mortgaged building held through a partnership. A non-U.S. investor is taxed under FIRPTA when it sells and must file a U.S. return. A private REIT between those investors and the property turns most of that income into dividends, though the REIT brings its own rules: no five individuals may own more than half of it, and 90 percent of its taxable income goes out the door each year.
The asset decides the vehicle. Opportunistic and value-add strategies, which buy, fix, and sell, fit a closed-end fund with a set investment period. Stabilized income portfolios fit an open-ended vehicle that admits and redeems at appraised net asset value.
We form both, along with the joint ventures and club deals that raise a single asset or a program, and we reconcile the asset-level promote with the fund-level carry so the two waterfalls do not pay the sponsor twice. Where capital or property sits offshore, locally admitted counsel joins at the first draft.
We form the fund vehicle itself, either a closed-end fund for opportunistic and value-add strategies with a defined investment period and exit, or an open-ended vehicle for a stabilized, income-producing portfolio held for the long term.
REIT structures and blocker entities to shield tax-exempt and non-U.S. investors from the tax consequences of holding U.S. real property directly, structured into the fund alongside the feeder arrangements they require.
Single-asset and programmatic joint ventures pairing a sponsor with an operating or capital partner, and club deals assembling a small group of known investors. Each is documented around capital, control, the promote, and exit.
We draft and negotiate the management fee, carried interest and promote, preferred return, distribution waterfall, and catch-up in the partnership agreement and side letters, and reconcile asset-level promotes with the fund-level carry.
The private placement memorandum, subscription agreement, and investor questionnaires, prepared so the raise stays inside the exemption the fund relies on.
Offshore feeders and parallel vehicles where the investor base calls for them, structured across the jurisdictions property sponsors use and coordinated with locally admitted counsel where a registered office or local licensing is required.
A non-U.S. investor can sell shares of a domestically controlled REIT free of FIRPTA, a status that requires non-U.S. persons to have held less than half of the stock throughout the testing period, up to five years. Many fund REITs cap foreign ownership in their charters and ask investors to certify at each close.
Qualified organizations, meaning pension trusts and educational institutions, can hold mortgaged real estate through a partnership without unrelated business income tax, but only if the partnership's allocations satisfy the fractions rule of Section 514(c)(9), which forbids allocations that shift disproportionate income to the tax-exempt partners. A promote can violate it unless drafted carefully.
Gain on property a REIT holds primarily for sale to customers is taxed at 100 percent as a prohibited transaction, unless the sale fits the safe harbor: a two-year hold, limited development spending, and no more than a set number or share of sales each year. Value-add funds with REIT blockers plan exits around it.
Borrowing against uncalled commitments delays capital calls, which shortens the period over which the preferred return accrues and raises the reported IRR without changing the cash multiple. Investors now ask the LPA to cap the line's size and tenor and to report returns with and without it.
A fund that holds buildings in fee is outside the Investment Company Act, and a manager advising only on real property is not an investment adviser. Add REIT shares or joint-venture interests that count as securities and both analyses change, often past 40 percent of assets. The portfolio composition is a regulatory fact.
Investors enter and leave an open-ended vehicle at net asset value, so the appraisal policy sets the price of every subscription and redemption. The LPA fixes who appraises, how often, and what happens when redemption requests exceed available cash: a pro rata queue, a gate at a percentage of NAV per quarter, or a suspension.
Before a single LP sees paper, the vehicle is settled around the assets and the investor list: closed-end or open-ended, a Delaware LP over a REIT blocker or without one, offshore feeders for the non-U.S. and tax-exempt money. The hold period and income profile of the properties decide that architecture.
The PPM, limited partnership agreement, and subscription package are drafted together: the waterfall, preferred return, and catch-up reconciled against any asset-level promotes, the borrowing and subscription-line authority written in from the start, and the raise kept inside the securities exemption it relies on.
Anchor investors arrive with side-letter asks: fee breaks, co-invest rights, excuse provisions, MFN. Each is negotiated, logged against the MFN election process, and reconciled with the LPA before capital is accepted. First close turns the structure on, and the fund can start buying buildings.
Subsequent closings admit new investors with equalization interest, the subscription facility bridges capital calls to acquisitions, and REIT-level testing and transfer mechanics run underneath. By final close the fund is a working acquisition vehicle, and distributions will track each property as it is realized.
A building is bought once. Its waterfall is read at every distribution for a decade, so draft it accordingly.
A real estate fund is a pooled investment vehicle through which a sponsor raises capital from investors to acquire, develop, or hold property and property-related assets. It is typically organized as a limited partnership or limited liability company, with the sponsor acting as general partner or manager and the investors committing capital as limited partners. The structure sets the economics, the governance, and the tax treatment for the life of the vehicle.
It depends on the strategy and the assets. A closed-end fund raises a fixed pool, deploys it over a defined investment period, and returns capital as assets are sold. That fits opportunistic and value-add strategies with a clear exit. An open-ended fund allows ongoing subscriptions and periodic redemptions and suits stabilized, income-producing portfolios held for the long term. We model both against the hold period and liquidity expectations before recommending one.
A real estate investment trust can be used inside a fund as a blocker that shields tax-exempt and non-U.S. investors from certain U.S. tax consequences of holding real property directly. Whether to insert a REIT, and where in the structure, turns on the investor base and the asset profile. We structure REIT blockers and feeder arrangements as part of the formation, and coordinate with tax counsel on the qualification and distribution requirements.
Not every real estate strategy is raised as a blind-pool fund. A joint venture pairs a sponsor with one operating or capital partner on a single asset or program, and a club deal assembles a small group of known investors around a defined opportunity. Both turn on a carefully negotiated agreement covering capital, control, the promote, and exit. We structure and document JVs and club deals alongside traditional fund vehicles.
The economics live in the partnership or operating agreement and any side letters: the management fee, the carried interest or promote, the preferred return, the distribution waterfall, and the catch-up. Real estate funds often layer asset-level and fund-level promotes and tie distributions to the realization of individual properties. We draft and negotiate these terms for sponsors and for investors, with the tax consequences worked into the draft.
Fewer than apply to a securities fund, and the difference turns on what the fund holds. A fund that owns property in fee is not an investment company, because real estate is not a security, and a fund holding mortgages and real-estate interests can rely on Section 3(c)(5)(C) if at least 55 percent of its assets are qualifying real-estate interests and a further 25 percent are real-estate-related. The interests the fund sells are still securities, so the offering runs under Regulation D with Form D filed within 15 days of the first sale, and the manager becomes an investment adviser once the portfolio holds securities such as REIT shares or joint-venture interests. Offshore vehicles bring local registration, which we coordinate with locally admitted counsel.
Formation of venture funds and their management entities, covering fund and GP structuring, LP terms, and the governance an early-stage strategy runs on.
Explore →Closed-end buyout and growth funds, with the investment-period and waterfall terms, carried interest, and LP agreement that govern a control-oriented strategy.
Explore →Open-ended and evergreen vehicles, including the subscription and redemption mechanics, NAV and valuation terms, and liquidity framework a perpetual structure requires.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
One partner is accountable for the whole matter, and you have that partner's direct line. Chicago, London, and Dubai work to the same standard.