Owners can recapitalize equity and receive cash from a newly-formed permanent capital vehicle
1. Replace limited partner investors with a permanent capital structure¹
2. Retain full operational control of the asset and continue receiving management fees for the asset
3. Realize gain in asset value for existing investors without a disposition of the asset
4. Owner/sponsor retains full control
5. Reduce expensive preferred equity or debt
6. Add value to asset through repositioning, lease-ups, or tenant improvements
1 “Permanent” capital is an industry term contrasting public equity with no fixed redemption date from private equity capital that typically has fixed durations and exit dates, leaving real estate owners with the potential need to raise additional capital.