Why Real Estate Fund Managers Need to Rethink Their Operating Model

As real asset investment managers grow from a first discretionary fund into multi-vehicle, multi-strategy platforms, operational decisions quietly become some of the most consequential choices they make. Accounting, reporting, compliance, treasury and data management often operate behind the scenes, but when they break down, the impacts are immediate and visible via delayed closes, tougher audits, confused investors and stalled fundraising efforts.

For years, operations were treated as a necessary cost of doing business. Today, it is increasingly clear that it is part of the product itself. The quality, consistency and reliability of operational execution shape the LP experience.

The question for managers is no longer simply whether to keep operations in-house or outsource them. It is whether their operating model truly supports the scale, complexity and growth trajectory of the platform they are building.

Why This Question Is Different for Real Assets

Many real asset managers benchmark their operating approach against private equity peers. On the surface, this seems reasonable. In practice, it often overlooks the structural complexity of real asset platforms.

Traditional private equity funds typically operate with relatively clean capital flows and a limited number of entities per investment. Real asset platforms, by contrast, must coordinate activity across multiple entities, joint ventures, operating partners, investment vehicles and investor groups.

Behind every clean reporting cycle sits a large volume of work that must be standardized, reviewed, reconciled and consolidated correctly. As portfolios grow, the increase in operational burden is not linear. It compounds.

When these systems become strained, LPs feel the impact through delayed closes, audit stress, NAV errors or inconsistent reporting. Over time, operational reliability becomes inseparable from reputation.

From Back Office to Strategic Capability

As operational complexity increases and LP expectations rise, managers must reconsider how they think about operations. Many are recognizing it as a strategic capability that can either enable growth or quietly constrain it.

Early operating model decisions often work well for a first fund or a limited number of vehicles. But as complexity increases, those same choices can introduce fragility through more handoffs, more exceptions, more spreadsheets and more points of failure. A single miss can cascade across reporting, controls and investor confidence.

Operating Model Decisions Don’t Stop at Execution

As managers rethink how operations are delivered, execution and efficiency tend to dominate the conversation. Equally important, however, is how operating costs are treated and disclosed.

Changes to operating models can alter where expenses land and how those costs flow through reported performance. If not thoughtfully designed, transitions can introduce variability driven by expense mechanics rather than underlying investment results.

For institutional investors, especially in open-end or benchmarked vehicles, consistency and comparability matter as much as cost itself. Operating model decisions that overlook expense treatment can undermine LP confidence, even when operational execution improves.

This is why operations has become inseparable from fund economics. The design choices managers make must support not only scalability and control, but also transparency, predictability and alignment with disclosed terms.

A New Framing for Operating Model Decisions

The real question facing managers today is not whether operations should be internal or external, but how to design an operating model that fits the platform they are building.

Operating model decisions should evolve alongside platform maturity. A lean, fast-growing manager, a scaling multi-vehicle platform and an institutional multi-strategy firm face very different operational realities. Each stage demands different tradeoffs between control, scalability, cost structure and institutional resilience.

The table above is not a prescription, but a reflection of how operating priorities tend to shift as platforms mature. As complexity grows, so does the need for repeatable processes, deeper specialization and stronger controls.

One pattern appears consistently: operational risk often grows faster than investment complexity. It rarely announces itself, but compounds over time through small inefficiencies, fragmented systems and key-person dependencies. In a market where LP expectations continue to rise, operations becomes a source of differentiation; and, for those who get it right, a form of alpha.

What’s Next

Recognizing operations as a strategic capability is only the starting point. The harder challenge is balancing two forces that often pull in opposite directions: control and scalability. How much control is truly necessary? When does customization become constraint? And at what point does scalability become more valuable than ownership of every process?

In our next blog, we will explore how managers evaluate in-house, outsourced and lift-out models in practice, and how leading platforms decide where to sit on the control-versus-scalability spectrum as they grow.

Supported by an expert team with extensive experience, SS&C offers a comprehensive solution for operations, accounting, analytics and reporting for real estate funds, infrastructure funds and other hard assets so you can free your staff to focus on higher-value activities.