As covid-era private real estate deals underperform, investors are probing whether market timing or poor manager decisions are to blame. Traditional metrics like internal rate of return and multiple on invested capital have dominated performance discussions, but a new focus is emerging.

Loss ratios – which measure a manager's ability to preserve investor capital – have been tracked by some investors and consultants for over a decade. However, the major market dislocation and pricing reset in private real estate has prompted much greater scrutiny of this metric.

The shift reflects heightened concern about downside protection during the sector's correction. Investors want clearer answers about whether underperformance stems from broader market forces or from specific manager mistakes. Loss ratios offer a way to distinguish between the two.