Family Office Real Estate Blog

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In a recent Preqin Investor Outlook Report (Real Estate H1 2016) it stated that private wealth is an increasingly important source of capital to the real estate asset class, with wealth managers and family offices currently making up 17% of the real estate investor universe. The majority (51%) of private wealth firms are wealth managers, while multi-family and single-family offices constitute 25% and 24% respectively (Fig. 4.10). As global numbers of high-net-worth individuals increase year on year, the importance of private wealth as a source of capital for the real estate industry is set to grow. Fifty-eight percent of fund managers surveyed by Preqin stated they had seen more appetite for real estate from family offices over the past year, more than any other investor type.

I know that my focus is on Family Office and Real Estate but today at the Family Office Association that was held at the Four Seasons Resort in West Palm Beach i had the chance to listen to a presentation by Kai Nygard from the Nygard Family Office.  The topic was the Family Quest for the Fountain of Earth.   During his discussion he was explaining how in an effort to help his grandmother from dieing, he started to explore alternative medical benefits for those that are sick along with ways to increase the life cycle of individuals.   The passion he displayed to learn more and to come up with not only answers but solutions was inspirational.  A true example of someone making a difference with family wealth and a potential difference that could effect all of us for generations to come.  Kai Nygard - remember his name because i think it will be a name that we hear more than this one time.

Years ago, before the downturn I was paying very close attention to the investing allocation of my Alma Maters Endowments Investing Strategy HMC (Harvard Management Company), especially in the area of real estate.  I believe that not only was Harvard a great place to understand the importance of investment allocation strategies before the downturn but even more so since the downturn. In fact, investors who are looking to enhance the performance of their investment portfolios probably won’t find a better investment model than the one used by the $37.6 billion endowment for Harvard University. The entity in charge of managing the endowment, Harvard Management Company (HMC), has accrued an impressive investment track record across its 41-year history. As of fiscal year 2015, the endowment had produced an average annual return of 12.2% – 290 basis points higher than the average 9.3% return of a typical U.S. 60/40 stock and bond portfolio. The methodology behind HMC’s success i...

Part 2:   -   Why the cycle repeats In the last post we set out the basics on the real estate cycle which was provided by Akhil Patel at Ascendant Strategy . So you may be thinking: that sounds plausible. But why does the cycle repeat? The reason is actually quite simple. There are three factors of production: capital, labor and land. Capital and labor you will be familiar with, because your Econ 101 textbook would have discussed these at great length. But the third factor is land. Here, your modern economics books will be useless as they don’t discuss it at all. This is strange, because it was well known to the great classical economists, such as Smith and Ricardo. And it is what happens to land that is key to the cycle. This also means that economic experts, who haven’t been introduced to land as a main factor of production, won’t be able to see it. It’s all about the location Land is important because economic activity takes place in spe...

For some time now I have been working closely with a brilliant economist out of the UK regarding real estate market cycles.   I wanted to share with you some of his comments on the real estate market cycle in a two part blog.  - DJ By:   Akhil Patel Part 1: What investors need to know about the real estate cycle If I were to tell you that property investors could have known in advance that the property market was going to tank from 2006 on wards and that they could have avoided losing the trains that were wiped off the value of real estate: would you have believed me? Well, now that The Big Short has shown that some investors exploited the financial meltdown you may think that it is possible. But the book and film make it out that you have to be super smart, a total contrarian. And have access to people to do research for you. They made it seem like it was a one-time event. Even those super-smart guys don’t get it. That’s the long and short o...

Last week i had the chance to go to the Single Family Office Conference in New York City held by Wilson Conferences.  During the conference i had the opportunity to sit on a real estate panel and here is one of the takeaways from the conference. "Housing is seen by some family offices as a safe security.  As one family office put it on our real estate panel, "It's defensive to invest in anything related to housing.  Bob Faith, the CEO in the Charleston, N.C. office of multifamily real estate money manager Greystar Real Estate Partners commented, "Housing is way less volatile than other real estate product types."  As with other asset classes, the geography and quality of the investments matters; so to with real estate as specific tier 1 markets like New York and Miami have very low cap rates relative to other markets like suburbs of Denver, where one single family office is based and investing locally.  "