This chart shows reported long-term average annual returns, gross and net of fees, for different forms of real estate ownership. The line starts from the average net unlevered return of institutionally owned commercial properties (6.44%) and shows what the return would be if you simply applied leverage at a long-term average cost of 5.75%. Any NET return above the line suggests better performance at the property level. Private equity real estate funds following core (lavender) and value-add (blue) strategies have under-performed. Private equity funds following opportunistic strategies have over-performed, but not by much, with average net returns of 8.20% compared to implied net returns of 7.48% for institutionally owned private real estate with comparable leverage. Listed U.S. equity REITs have performed much, much better, with long-term average net returns of 10.19% compared to the implied net return of 6.90% for institutionally owned core properties using comparable leverage (40%, the approximate long-term average for listed equity REITs). There is abundant data showing that private real estate has tended to perform worse than listed real estate in the U.S.; this also suggests that private real estate funds have tended to perform worse than institutionally owned private real estate that is held directly rather than through funds. Questions? Contact me at bcase@nareit.com.