Thinking Like an Institutional Investor: Five Things You Need to Know

The leap from working with family offices and high net worth individuals to institutions can be daunting. Today, we'll explore how institutions make decisions.

Today’s Thesis Driven is a guest letter from Jonathan Andrews. Jonathan Andrews is Principal of JJA Real Estate Consulting, an independent real estate consulting and capital advisory practice based out of New York. He has previously held positions at Nuveen Real Estate, Twining Properties, and Arch Companies.

The real estate industry often draws a line in the sand between institutional versus non-institutional investing practices. In many cases, real estate investors and operators will refer to a certain type of asset being “sub-institutional” in scale or appeal, or an emerging asset class succeeding by winning the interest of institutional investors over time.

But concretely, what does it mean when we talk about “institutional investors?” How do their strategies and methods differ from their non-institutional peers? And what are the advantages and disadvantages of following the investment strategies utilized by these players? 

In this letter, we will present a condensed understanding of what makes an institutional investor, how they invest, and what lessons can be learned from them.