Understanding the fees of a real estate investment fund

A real estate fund has five major fee categories. Each one comes into play at a different stage in the life of the investment, follows its own logic, and pays for a distinct function. Understanding them helps you see not only how much you pay, but when and why.

1. Entry fees — at subscription

These are the only fees charged before your money even starts working. Most retail funds in Europe charge between 2% and 3% of the amount subscribed, and SCPIs often go well beyond that (8% to 12%), building this cost into the share price rather than charging it separately. In both cases, this charge mechanically reduces the capital actually invested from day one.

At Makers fund, this fee category does not exist: the subscription fee is 0%. An investor who subscribes €10,000 sees the full amount converted into fund units, with no upfront deduction.

2. Management fees — ongoing, throughout the holding period

This category covers the fees that apply every year, whether or not the fund completes a specific transaction. They are calculated as a percentage of the fund’s value (the NAV, or net asset value) and charged continuously — usually accrued daily, then recognized when the NAV is calculated periodically. This is the category that weighs most heavily over time: unlike an entry fee paid once, a management fee repeats every year of the investment, and its cumulative effect over 8 years often exceeds that of one-off fees, even when the stated rate looks more modest.

At Makers fund, this category is split into three fees with distinct functions:

• Management fee (1.06% to 1.35% excl. VAT p.a.) — portfolio management and investment strategy oversight.
• Administrative fee (max. 6%) — processing subscriptions and coordinating with the depositary.
• Middle-office fee (max. 2%) — KYC and regulatory checks (MiFID II).

3. Investment-related fees — when a transaction is made on an asset

This category is triggered only when the fund actually carries out a transaction — a purchase, sale, or works on an asset — and not at regular intervals. It is borne by the fund as a whole (and therefore indirectly by all unit holders, pro rata), rather than charged individually to each subscriber at the time of investment.

At Makers fund, four fees fall into this category:

• Acquisition fee (max. 5% excl. VAT of the purchase price) — sourcing, due diligence, and negotiation when buying an asset.
• Disposal fee (max. 3% excl. VAT) — exit strategy and negotiation when selling an asset.
• Works monitoring and oversight (max. 3% excl. VAT, only if works are carried out) — site coordination and project supervision.
• Structuring fee (max. 2% excl. VAT) — setting up financing.

4. Financing fees — when financing is repaid

This category is specific to the fund’s debt operations. It is triggered at one precise moment: the full repayment of financing, not when it is put in place (that falls under the structuring fee above).

At Makers fund, a repayment fee (max. 2% excl. VAT) pays for monitoring the repayment schedule through to maturity.

5. Redemption fees — for early exit

This final category applies only to the investor who wants to exit before the fund’s recommended maturity. It exists for a simple reason: a real estate fund holds illiquid assets, and an early redemption may force the manager to sell an asset in poor conditions, or to draw on cash intended for other investors. Time-based declining fees therefore protect those who remain invested by discouraging early exits.

And if the fund performs better than expected? The performance fee

Some funds include a performance fee: a mechanism separate from the fees above, since it is triggered only if returns exceed a pre-set threshold. Below that threshold, the fee is zero. At Makers fund, it applies in tiers: 20% of the excess above 10% annual return, 30% above 12%, and 40% above 14%. In practical terms, if the fund delivers 12% return in a year, the fee applies only to the 2 percentage points between 10% and 12% — not to the full performance. It is an alignment mechanism: the management company is paid more only if it creates more value for investors.

Why so many different fees instead of one single figure?

A real estate fund does not work like a simple savings account: it buys, manages, and sells real assets, sometimes finances its operations with debt, and must comply with a strict regulatory framework (CSSF supervision, ESMA oversight under ELTIF 2.0). Each fee category corresponds to a distinct operational function rather than a generic flat charge. In principle, this breakdown makes things easier to read: you can identify exactly what each charge pays for, instead of facing one aggregated and opaque figure.

That said, this clarity only matters if you compare the cumulative effect of all fees over the recommended holding period, rather than stopping at the most visible fee, often the entry fee. A fund with no entry fee but high management fees can cost more over 8 years than a fund with a moderate entry fee and lower ongoing fees — and vice versa. What matters is the cumulative effect, not any single fee in isolation.

At Makers fund, the communicated return targets — a 10% target IRR over 8 years and a 6% target distribution rate — are stated after deducting all management, structuring, and administrative fees. They are therefore net targets, not gross returns from which you would still need to subtract fees to know the actual outcome.

All investments involve the risk of capital loss. Past performance is not indicative of future results. The return and distribution targets mentioned are targets, not guarantees. Their actual amount depends in particular on rental income received and the conditions under which portfolio assets are sold.

Key takeaways / Checklist

Before investing in a fund, it is useful to check:

• The rate and calculation method of management fees (NAV or gross assets)
• Whether entry fees exist
• The nature of investment-related fees (acquisition, disposal, works, structuring) and what triggers them
• Whether a performance fee exists and its trigger thresholds
• Whether early redemption fees exist and how they decline over time
• Whether the communicated return targets are stated gross or net of fees
• The key information document (KID/PRIIPs) and the prospectus, the only exhaustive and contractual sources