Healthcare specialists, including surgeons, face a lot of pressure in their work. The last thing they want is to have a stressful investing experience. Because he understands these pressures, Apta Investment Group’s founder Dr. Vasu Kakarlapudi started helping surgeons and other medical specialists invest their money to earn passive income and gain financial freedom.
When you’re working as a specialist in the healthcare field, it’s hard to find the time to learn about every potential investment opportunity. You need someone you can trust to guide you through the process.
Surgeons and specialists have already mastered the knowledge of complex human systems through rigorous study and methodical practice. Because you have spent so much time specializing in medicine, it’s not uncommon to feel ill-equipped about making major investment decisions. However, many principles apply in both scenarios, surgery and investing. In both areas, you can study, learn, and make informed decisions with consistent results.
Surgeons are well-equipped to make outstanding investment decisions, especially if they have the support they need. One of the options to consider is the commercial real estate private equity (REPE) investment model, also shortened to “private equity real estate.” This is a solid investment option for many surgeons, in part because it operates with similar precision to the work of surgery. That’s because the private equity real estate model follows established protocols to generate returns through three means: strategic property acquisition, value enhancement, and eventual disposition.
What is commercial real estate private equity?
Real estate private equity is an investment approach in which a sponsor or fund manager pools capital from accredited investors to acquire, improve, and manage properties. Typically, a real estate private equity firm handles these investments on behalf of the investors.
Simply put:
- Private equity means the investment happens privately, outside of the public stock market
- Commercial real estate refers exclusively to properties used for business or income purposes
These funds target institutional-grade properties (office buildings, retail centers, industrial facilities, and multifamily complexes) with the objective of generating, risk-adjusted returns through active management and strategic value creation. Investment groups may specialize in different kinds of commercial properties. For example, multifamily private equity real estate firms will invest in apartments, whereas a retail private equity firm will build a portfolio of retail facilities. However, many firms take a multi-pronged approach and invest in different types of properties for a diverse portfolio.
Apta Investment Group offers a range of tailored investment opportunities, including single asset investments and diversified fund options.
REPE is considered an “alternative investment” category. It’s true that this approach requires substantial capital commitments, sophisticated due diligence processes, and patient capital willing to wait years for full returns. However, those limitations make it exciting for surgeons, who are often in the perfect position to benefit from investment opportunities that others may not be drawn to.
Understanding alternative investments
Alternative investments include asset classes beyond traditional stocks and bonds:
- private equity
- hedge funds
- commodities
- real estate
People are attracted to these alternative investment methods because they are typically less affected by public market volatility. (That said, real estate valuations can still be affected by interest rates, economic downturns, and liquidity crunches. Correlation to public equities can increase in stressed markets.) Additionally, they offer potential for enhanced returns through legitimate means. They also enhance portfolio diversification.
However, they come with trade-offs. Specifically, alternative investments are accompanied by:
- the need for higher minimum investments
- longer commitment periods
- limited liquidity when compared to publicly traded securities
They are only accessible to accredited investors with substantial net worth. To be an accredited investor, the SEC must determine that an investor is financially sophisticated enough to engage in private security offerings, even though they are not registered with the SEC. Accredited investors, especially those who are physicians, usually have a larger amount of capital available to invest. Therefore, they can take on the risk of less-regulated investment models.
They’re a great option for investors who have expert guidance from experts like my team at Apta Investment Group.
Commercial REPE occupies a distinct position within the alternative investment landscape. Unlike venture capital or buyout funds that focus on operating businesses, REPE funds concentrate exclusively on real estate assets.
Key Characteristics of REPE Investments
REPE funds typically structure investments as limited partnerships, in which institutional investors and high-net-worth individuals serve as limited partners. Meanwhile, the fund managers act as general partners.
At Apta Investment Group, we serve as the general partners, who assume responsibility for sourcing deals, conducting due diligence, managing properties, and executing exit strategies. Surgeons who work with us serve as limited partners, who provide capital commitments while maintaining passive roles in day-to-day operations.
This structure protects limited partners from operational liability while providing fund managers with decision-making authority.
The investment approach varies significantly based on risk profile and return expectations:
- Core investments target stabilized, income-producing properties in prime locations with creditworthy tenants, emphasizing steady cash flow and capital preservation
- Value-add strategies focus on properties requiring moderate improvements or repositioning, seeking to enhance cash flow through renovations, lease-up, or operational improvements
- Opportunistic investments pursue distressed assets, development projects, or complex situations requiring significant capital investment and active management
How REPE differs from equity REITs
If you’re considering your investment options, you may also be looking at REITs (real estate investment trusts). Both of these options give you access to commercial real estate investments, but the structure, investment strategy, and investor experience can be quite different.
The best option for you will be the one that aligns with your specific investment objectives and risk tolerances.
Structural and operational differences
Equity REITs operate as publicly traded companies that own and operate income-producing real estate. Regulations demand that they distribute at least 90% of taxable income to shareholders as dividends, and they must provide daily liquidity through trading on the stock exchange.
This structure requires REITs to maintain a substantial property portfolio, as they need to support consistent dividend payments and accommodate frequent redemptions by investors. REITs face constant pressure to maintain occupancy rates, rental income, and property values to satisfy those dividend expectations.
REPE funds are structured with some key differences. They function as private partnerships with closed-end structures and finite investment periods. Investors commit capital that may be called over several years as investment opportunities arise. Once committed, capital typically remains invested for the fund’s duration, with returns distributed upon property sales or refinancing events. The fund can also produce cash flow, which is distributed quarterly to investors.
This structure enables fund managers to pursue long-term value creation strategies without pressure from daily market fluctuations or immediate liquidity demands. Well-capitalized fund managers can afford to hold properties through market cycles, time exits strategically, and implement complex improvement projects that may temporarily reduce cash flow.
Investment strategy differences
In addition to the structural differences, the strategic approaches between REITs and REPE funds reflect their different structural constraints and investor bases.
REITs prioritize consistent income generation to support regular dividend payments, leading to more conservative investment strategies that are focused on stabilized properties with predictable cash flows.
Property improvements typically involve routine maintenance and modest enhancements rather than transformative renovations. REIT managers must balance capital allocation between acquisitions, improvements, and dividend distributions while maintaining financial metrics that satisfy credit rating agencies and equity analysts.
REPE funds can pursue more aggressive value creation strategies, thanks to their longer investment horizons and sophisticated investor base. For example, fund managers may acquire distressed properties for major renovations, or just outdated (and structurally sound) properties in need of a significant refresh.
One additional substantial advantage of REPE is that investors are limited partners. This makes them fractional owners of the asset itself. Therefore, they can receive their pro rata share of the tax benefits of the investment through depreciation.
REPE investment managers can navigate complex zoning changes or develop properties from the ground up. These strategies often require several years to implement but can generate substantial returns when executed successfully.
Contact Apta to explore investment opportunities and grow your future
Commercial real estate private equity offers accredited investors a unique opportunity to diversify their portfolios, generate long-term returns, and participate in institutional-grade real estate projects. With the right sponsor, private equity real estate can be a powerful tool for building wealth through strategic, hands-off investing.
If you’re ready to work with a commercial real estate private equity firm as a powerful addition to your investment strategy, our team is here to help. Schedule a call today to learn how Apta Investment Group can support your long-term financial goals.