- Base fee
- Performance fee
Some investors look at how the Reit managers are compensated to determine whether there is an alignment of interest.
The logic is, if the interest is aligned, then the long run performance of the Reit should be better than if it wasn't.
This makes sense.
If investors feel the pain when their Reit's lose money, at the very least, the Reit managers should, rightly, also share in the misery.
The opposite is also true, if investors make money, Reit manager should be rewarded.
The management fees of Reit managers come in two components: