Family Office Real Estate Blog

INTRO DUCTION Ten   m onths  ago our family office made a decision to become part of the family office community. During that time I have had the chance to attend nine  different conferences put on by seven different conference organizers, and I have had the chance to meet close to three hundred families. By going through this process I have learned a number of things, the most important item and one that makes 100 percent sense to me is that there is a major family office   investment trend. Family offices are moving away from funds as a result of fees, transparency, nonalignment   of interests, and the inability to understand all of the investments within the fund. Because of these issues (and a few others), family offices are moving toward   direct investments, coinvestments , and partnering with other families in the specific area in which each family created its w ealth   . A TREND IN DIRECT INVESTING In a recent article by Margaret Collins, Devin Banerjee, and

Embedded in CNBC’s Real Estate “Recovery Watch” data center is evidence that the US real estate cycle is in full swing.  You can access it  here . It shows that of the 141 main cities in the contiguous United States, only 5 saw price falls in the last12 months (and those prices fell by 1 per cent in those 5 cities). Expect general rise in prices to continue for a while. Akhil Patel, of US Family Real Estate, said the following: “It’s ironic that CNBC refers to its graphics as a “recovery” watch. The US real estate market recovered a long time ago. The data shows that the current real estate cycle is now in full swing. Expect to see continued house price appreciation across the United States as well as rising demand for housing, increase in construction and mortgages. The real estate cycle plays out over 18-20 years historically, and there is much further to go.” You can read more about the cycle by downloading our White Paper.

A few weeks ago I had the fortunate opportunity to attend two great conferences where I was asked to sit on panels for.  The first was the IMN Conference in California regarding real estate and family offices and the second in Chicago which was a family office private equity conference held by the law firm Handler Thayer. At both conferences a common theme came up which I have noticed for quite a number of months that I have been attending these conferences, and that is  1) family offices are fee conscious and the 2 and 20 doesn't work for all family offices, and 2) that family offices are partnering with other family offices on investments more and more.  For me that makes perfect sense.  In fact 9 months ago in our family office we were going to launch a fund to endowments and family offices with the expectation of me managing it.   After really digging into the family office community I ended up recommending that we don't start a fund that we focus on separately managed

Sixty-nine percent (69%) of Study Participants say they Currently Engage in Direct Investing According to a published article from the Family Office Exchange, more than two-thirds of family offices engaged in direct investing in 2015. The finding was one of several key insights in the 2016 FOX Global Investment Survey from Family Office Exchange (FOX), a global membership organization of enterprise families and their key advisors. The study provides an in-depth look at the investment activity of leading single family offices, providing perspective on a range of topics including Economic Outlook and Investment Opportunities for 2016, Asset Allocation and Performance, Use of Investment Consultants and Investment Committees, Reliance on Alternative Investments, and Direct Investing. According to the report, families with first- or second-generation leadership are much more likely to do direct investing than families with later-generation leadership, with 81% of Gen 1-2 familie

For Family Offices investing into real estate  there is one demographic that can't be denied and that is the aging population.  Many first generation patriarchs are part of this wave but more importantly 2nd and 3rd generation investors need to be aware of this continual trend to capitalize on the opportunities in the future.   Lesley Deutch, a principal with john burns real estate consulting summarized this surge in a recent write up below. Only 10 years ago, 2.2 million people were turning 65 each year. That number has surged to 3.5 million this year and will grow to 4.2 million in 2025! Tomorrow’s retirees will completely transform the housing industry. We have done a tremendous amount of research on this group, all of whom were born in the 1950s. We call them the  Innovators  because they have created so many innovations throughout their lives. They are: Tech savvy, which began with their space race fascination as kids Family-oriented, with almost 50% reporting