As the real estate market is poised to welcome new investors, RSM has put together a guide for emerging fund managers. Learn more about the steps, strategies, structures, and compliance to consider when launching a new fund in our emerging real estate fund series.
- Today’s investors expect greater transparency.
- Technology can go a long way toward providing openness.
- RSM has a new tool that can help.
In addition to seeing strong returns, investors want to feel confident they know how a fund is deploying their capital, and it is important to be as transparent as possible.
One way to establish transparency with investors is through well-written fund documents, including the private placement memorandum and operating agreement. Next is a standard cadence of external reporting—an annual report that includes an audit, as well as quarterly reports that cover all investments. Funds should also identify conflict-of-interest policies and be vigilant regarding disclosures.
“We've seen that it’s very beneficial to have an advisory or a limited partner advisory committee as part of the overall investor team that interacts with the management of a fund,” says Tom Green, national real estate assurance leader for RSM US.
"Emerging fund investors expect strong internal controls to reduce reputational, compliance, and financial risks related to their investments," says Nate Ruey, an RSM US risk advisory services partner. Manuals that spell out internal control policies and procedures on everything from cash management to cybersecurity help provide a holistic approach, he says.
This article was originally published in partnership with Bisnow.