Investment Manager Consolidation in Real Estate: Trends, Drivers, and Considerations

Consolidation among real estate investment managers has long been a feature of the market. What distinguishes the current landscape is the breadth of market participants and range of strategic objectives and deal structures being deployed. Managers now face a backdrop of challenging transactional conditions, higher working capital requirements, and increasing competition for LP allocations. These pressures are prompting managers and investors to explore strategic capital solutions – to realign ownership, scale platforms, or institutionalise operator-led strategies.

These transactions typically fall into the following categories:

• Manager Buyouts (control realignment and succession):
  • Involves acquiring a controlling interest in a real estate investment manager, often by a larger institutional platform seeking strategic expansion, e.g. a core manager “bolting on” an opportunistic or value-add capability.
  • For buyers, these deals offer immediate scale and access to differentiated strategies; for sellers, they provide liquidity and institutional backing to accelerate growth and a framework for founder or key-person succession.
• GP Stakes (strategic capital to scale existing platforms):
  • GP stakes transactions involve the purchase of a minority interest in a management platform with an established track record by an investor seeking long-duration exposure to diversified management fees, carried/promote economics, and long-term AUM growth across multiple fund cycles. This capital is often used to fund GP commitments, expand teams, develop new products, and enhance access to institutional infrastructure.
  • Several institutional investors have launched sector-agnostic GP stakes strategies, signalling growing demand in this space.

Market Drivers

Several factors underpin the rise in manager consolidation, particularly in private equity real estate:

1. Liquidity Pressures in a Dislocated Market

Real estate managers are facing slower realisations and extended hold periods, especially in sub-sectors where pricing remains uncertain. Selling a stake – whether majority or minority – provides immediate balance sheet strength to fund GP commitments, retain/hire talent, and invest in operational upgrades without relying solely on fund-level economics.

2. Succession Planning

Many managers are considering how to transition ownership and leadership as their businesses mature. Succession planning is a key driver for minority and majority stake sales, providing founders with liquidity while introducing governance structures and equity incentives for the next generation. Larger institutional managers and specialist GP stakes investors can bring institutional credibility and operational support that positions managers for long-term growth.

3. Competitive Pressure

The largest global platforms already enjoy scale, brand recognition, and deep investor relationships. For smaller and mid-sized managers, competing for capital and deals is increasingly difficult. LPs expect robust governance, compliance and reporting – requirements that demand significant investment.

Selling a minority stake or partnering through a buyout can provide the capital and credibility needed to meet these standards and remain competitive. Without this, many managers risk being crowded out as LPs consolidate commitments to fewer, larger platforms.

4. Scale Matters

Beyond competitive pressures, scale itself delivers tangible benefits. Larger platforms can spread fixed costs (e.g. back office support) across a broader AUM base, improving margins and operational efficiency. Scale also improves access to capital: institutional investors increasingly favour managers with global reach and multi-strategy capabilities, making consolidation an attractive route to accelerated growth.

5. Investor Appeal

For investors, these deals offer recurring, diversified cash flows from management fees and carry, often with co-investment rights and early access to new fund vintages. This creates a compelling risk-return profile compared to traditional fund investments.

6. Platform Building

As a related theme, we are also increasingly seeing capital partners are backing operators with strong sourcing and operating capabilities to build or accelerate an investment management platform. This typically involves providing working capital, seed capital for initial assets, and governance, reporting and fundraising support.

Key Considerations

These transactions present a number of key considerations:

1. Valuation and Pricing Mechanics

Valuation uncertainty in underlying real estate makes it challenging to predict future fee streams and carried interest. To bridge this gap, earn-outs and deferred consideration have become common, helping to bridge valuation gaps.

2. Governance and Control

These transactions often require careful alignment of governance rights between existing owners and new investors to reduce the risk of friction between stakeholders post-transaction. Key considerations typically include:

• decision-making authority over investment strategy and key strategic/business matters; 
• default and buyout provisions, including triggers and discount rates; and 
• economic protections to preserve carried interest and incentive structures.

The key challenge is to strike a balance – providing investors with appropriate oversight while preserving the entrepreneurial flexibility that underpins the manager’s success.

3. Institutional Readiness

A recurring challenge in these transactions is that many managers – particularly those that have grown organically – are not “sale or investor ready”, often facing issues such as complex ownership structures, tax inefficiencies, or operational hurdles. Addressing these issues early can smooth the diligence and underwriting process.

4. Tax and Regulatory Overlay

Cross-border transactions often raise complex tax, regulatory and compliance considerations, including structuring, change-of-control notifications, and disclosure obligations which vary by jurisdiction and deal structure. Mapping these early is critical to mitigating execution risk.

Goodwin’s Expertise

At Goodwin, we are deeply embedded in the real estate private equity ecosystem. We deliver complex transactions through an integrated approach that brings together Corporate, Funds, Tax, and Regulatory expertise within a single cohesive team. This multidisciplinary capability is critical for manager buyouts, GP stakes deals, and platform formation, where balancing legal, commercial, and tax priorities is essential. Our experience in designing governance and economic frameworks from inception gives us a distinctive insight when advising on consolidation transactions.

We have acted on a number of leading transactions in this space and continue to play a part in shaping its evolution. To learn more about how we can support your platform or upcoming transaction, please get in touch with our team.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.