A team of graduate students from the renowned Olin Business School at Washington University in St. Louis recently completed an independent study on The Effect of Asset Size on Financial Performance in Real Estate. As part of the CEL Practicum, the independent study was specifically aimed at exploring the investment thesis of financial outperformance for micro real estate assets (defined as value ranging from $1-$10million) versus their larger counterpart macro assets.
The study was ultimately able to conclude with statistical significance that the micro asset strategy, as deployed by Bamboo Equity Partners, consistently outperforms macro assets when comparing such metrics as IRRs and overall change in value. The research goes on to further support micro real estate assets by attributing the enhanced performance to a number of external factors, including both the small firm effect (small cap firms outperform large cap firms) and the market inefficiencies that exist within the micro space.
“The opportunity to work with Bamboo Equity this spring was a formative and challenging learning experience for our student consultants. It’s been a privilege to collaborate with Dan and Alice,” said Daniel Bentle, director at the Center for Experiential Learning and adjunct professor of management at Washington University in St. Louis.
The Bamboo Team is very excited about the ever increasing appetite of the investor universe looking to diversify their investments into to the micro real estate asset space, and especially those entertaining emerging manager programs which have a proven track record of success. It’s becoming abundantly clear that this niche strategy is catching investor’s attentions and subsequently attracting more capital, and as is evidenced by this study, it is all very likely due to the attractive performance offered by these unique assets.