These three metrics define how the real estate industry measures scale, value, and performance. Here's what they mean, how they relate to each other, and how they work in practice — from a single property to a trillion-dollar portfolio.
Every real estate deal — whether it's a $400,000 triplex or a $25 billion development — is built on the same principle: leverage. The buyer controls an asset worth far more than the capital they personally invest. The rest comes from lenders, institutional partners, and structured equity.
This isn't unusual. It's the foundation of real estate finance. To illustrate, consider a structure most people already know:
| Layer | Amount | % of GAV |
|---|---|---|
| FHA Mortgage (Debt) | $386,000 | 96.5% |
| Buyer's Equity | $14,000 | 3.5% |
The buyer invests $14,000 and controls a $400,000 asset. They now have both $400,000 in GAV and $400,000 in AUM. They collect 100% of the rental income, 100% of the appreciation, and bear the management responsibility — all on 3.5% equity.
The institutional version of this same structure operates identically — at a different scale:
| Layer | Amount | % of GAV |
|---|---|---|
| Senior Debt | $75,000,000 | 75% |
| LP Equity (Institutional) | $22,500,000 | 22.5% |
| GP Equity (Sponsor) | $2,500,000 | 2.5% |
The sponsor invests $2.5M and controls a $100M asset. Their AUM: $100M. They earn management fees on the full asset value, carried interest on performance above the LP's preferred return, and a share of the upside at exit — all on 2.5% of the capital stack.
The structure is the same at both scales. The FHA borrower leverages 96.5% debt on a triplex. The institutional sponsor leverages 75% debt plus 22.5% LP equity on a $100M property. Both control assets far exceeding their personal capital. Both earn returns on the full GAV — not on their equity alone.
At the institutional level, every real estate transaction is funded in layers. The sponsor sits at the top of the capital stack with the smallest contribution — and the most operational responsibility.
The General Partner (GP) typically contributes 5–10% of total equity — which, at 75–80% leverage, translates to roughly 1–2.5% of the total asset value. This is standard across the industry, from mid-market developers to the largest alternative asset managers in the world.
The Limited Partners (LPs) provide 80–95% of the equity. They supply capital. The GP supplies deal sourcing, underwriting, structuring, construction management, asset management, and investor relations.
The debt layer — typically 70–80% of total capitalization — comes from banks, agencies (Fannie Mae, Freddie Mac), insurance companies, and mezzanine lenders. The GP's ability to secure favorable debt is itself a form of value creation.
The GP's returns come from four sources — and only one of them requires investing their own capital:
GPs earn 1–2% annually on AUM or committed capital for managing the portfolio. On a $200M platform, that represents $2–4M per year in recurring income — irrespective of asset appreciation. This covers operations and incentivizes portfolio growth.
After LPs receive their preferred return — typically 8% annually — the GP earns a disproportionately large share of profits above that threshold. A common structure: 70/30, where the LP receives 70% of excess profits and the GP receives 30%. On a deal returning 20% IRR, the GP's effective return on their equity can reach 3x to 8x their original investment.
GPs typically earn 1–2% on each acquisition and disposition. On a $50M transaction, that represents $500K–$1M at closing — compensation for sourcing, structuring, and executing the deal.
The GP's equity investment earns returns alongside the LPs — plus the promote. A GP who invests $2.5M in a deal that doubles may collect $5M from equity appreciation plus $8M+ from carried interest. Total return on $2.5M invested: potentially $13M+.
The following examples illustrate that this structure is not a workaround or an edge case. It is the standard operating model for the most recognized names in real estate.
$100B+ in AUM. Blackstone's Real Estate Income Trust manages over $100 billion in assets. As of Q3 2025, BREIT reported a NAV of $53 billion on total assets well exceeding $100 billion — reflecting the leverage embedded in the portfolio. Blackstone earns management fees (1.25% of NAV), performance allocations, and carried interest. Their GP capital commitment represents a small fraction of total fund equity.
Source: Blackstone Q3 2025 Supplemental Financial Data; BREIT Performance disclosures.
$25B total project cost. $18B+ capitalized from external sources in Phase 1 alone. Related Companies developed the largest private real estate project in U.S. history. The capital stack: construction loans from Wells Fargo, Deutsche Bank, Bank of China, and Standard Chartered. Equity from Oxford Properties, Mitsui Fudosan, J.P. Morgan Asset Management, sovereign wealth funds, and EB-5 investors. Related retained a 60% ownership stake while committing a fraction of the total equity — structuring institutional partnerships across every tower in the development.
Source: Hudson Yards press releases (2013–2026); Related Companies; Oxford Properties.
$1 trillion+ in AUM. GP co-invest typically 2–5% of fund equity. Brookfield manages one of the largest real estate portfolios on earth. Across their funds, Brookfield co-invests 2–5% of fund equity alongside LPs and earns management fees on full AUM plus 20% carried interest above an 8% hurdle rate. The model is designed to maximize capital efficiency — deploying institutional money at scale while keeping the GP's balance sheet lean.
Source: Brookfield Asset Management 2024 Annual Report; public filings.
| Sponsor | AUM / Project Size | GP Equity (% of GAV) | Revenue Model |
|---|---|---|---|
| Blackstone (BREIT) | $100B+ AUM | ~1–2% | 1.25% mgmt fee on NAV + performance allocation + carry |
| Related Companies | $25B (Hudson Yards) | Fraction of total equity | Development fees + management + 60% ownership via structure |
| Brookfield | $1T+ AUM | ~1–2.5% | 1.25–1.5% mgmt fee + 20% carry above 8% hurdle |
| Typical GP/LP JV | $20M–$500M | ~1.5–2.5% | 1–2% mgmt fee + 20–30% promote + transaction fees |
When a platform reports its AUM, it is reporting the total value of assets it controls, manages, or has economic interest in. This is the same metric Blackstone uses when it reports $1.2 trillion in AUM, the same metric Brookfield uses at $1 trillion, and the same metric every institutional allocator evaluates when assessing a manager.
AUM does not mean the sponsor invested that amount of their own money. It has never meant that. If it did, Blackstone would need $1.2 trillion in cash on hand.
AUM measures scale, reach, and market trust. A platform with $200M in AUM has demonstrated the ability to source deals, structure capital, raise institutional money, and manage assets at scale. The GP's own capital contribution is deliberately small — because the model is designed to maximize leverage and returns, not to prove the sponsor is wealthy.
Consider a hypothetical sponsor managing four multifamily acquisitions:
| Deal | GAV | Debt (75%) | LP Equity | GP Equity (2.5%) |
|---|---|---|---|---|
| Property A | $50M | $37.5M | $11.25M | $1.25M |
| Property B | $65M | $48.75M | $14.625M | $1.625M |
| Property C | $40M | $30M | $9M | $1M |
| Property D | $45M | $33.75M | $10.125M | $1.125M |
| Total | $200M | $150M | $45M | $5M |
The sponsor's total AUM: $200M. Total GP capital invested: $5M. Annual management fee income (1.5% of AUM): $3M. Carried interest exposure on successful exits across four deals: eight figures.
This is how real estate platforms scale. The GP's expertise, relationships, and ability to structure capital efficiently is the value — not the size of their personal check.