Over the last several years, real estate funds have been some of the fastest growing alternative investment vehicles. Although illiquid, real estate is often thought of as a more stable investment than equity or debt securities, and it has been a popular long-term investment choice. Successful real estate owners and developers have launched private equity funds in order to raise capital from investors and, therefore, obtain access to a dedicated pool of capital to fund new real estate investment opportunities, eliminating the need to raise capital on a deal-by-deal basis. Investing in real estate through a fund structure does come with many compliance, reporting and other responsibilities. In complying with the reporting requirements, many real estate funds struggle with the distinction of whether to report as an investment company or an operating company. Investors usually require that the funds in which they invest provide annual audited financial statements.