Skip to main content

Real Estate Deals Drive Family Office Direct Investing

In a recent post by www.famcap.com they discuss how family office direct investing drives real estate deals.

REAL ESTATE DEALS DRIVE FAMILY OFFICE DIRECT INVESTING

Family Capital 

 July 14, 2016

The number of deals involving real estate is a big part of the current direct deal boom driven by family offices, as the world’s wealthiest investors bet on strong property demand in the top real estate markets.

Just this week the family office of Stefan Persson, Sweden’s wealthiest individual and the chairman of the fashion chain H&M, was reported to have purchased a retail property complex in central London for a massive £400 million. If the deal goes through, it will be a big vote of confidence in the London commercial property market after the recent turmoil brought about by Brexit. It will also be indicative of how family offices are often able to take riskier investment bets than their institutional counterparts. After Brexit, many institutional and retail investors pulled money from UK property funds over concerns about the deterioration of the local real estate market following the vote to leave the European Union.

Persson’s family office Ramsbury Invest manages a big property portfolio in Europe, especially in London, Stockholm and Paris. But it’s not just the big cities that interest the billionaire, a few years ago Persson brought a whole village in the UK for £25 million in 2009.

“Investors like property because it’s the easiest asset to understand.


Another deal done recently was the purchase of a Munich hotel by the family office of the Dallmayr family, which control one of Europe’s largest delicatessen businesses. The deal was put together by TGR Immobilien Vermögensverwaltung, a family office that specializes in real estate deals. Specialist property family offices like Ramsbury and TGR are not uncommon. Others include the UK-based Evans Property Group and J. Leon. And others like TY Danjuma often have subsidiary property investment groups.

Recent big property deals involving family offices include the Safra Group, the family-controlled investment group of one of Latin America’s wealthiest families, which bought one of London’s most recognizable office blocks, the Norman Foster designed Gherkin, for an alleged sum of £700 million.

Investors like property, as one family office manager told Family Capital, because: “It’s the easiest asset to understand.” A study of 200 US single-family offices last year reckoned that on average family offices allocate around 18% of their portfolios to property. Although, as the research pointed out, a mean average isn’t a particularly useful guide given the wide spectrum of allocations, with some family offices allocating as much as a 100% of their portfolios to real estate and others zero.

What is more convincing is the returns possible in real estate, which is certainly going to attract family offices. Stephen Blyth, the head of the Harvard Management Company, which manages the university's huge endowment, recently said the Harvard direct real estate portfolio returned 35.5% in 2015.

Labels:

Comments

Post a Comment

Popular posts from this blog

Harvard's Endowment commits to a target investment range into real estate between 10% to 17% for 2016

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...
1 comment
Read more

"Family Offices NEED to be aware of the impact Blockchain and Cryptocurrencies will have on Real Estate Investing" Here's Why:

·         Blockchain has the potential to revolutionize how the real estate sector operates. ·         It will lower transaction costs  ·         It will provide family office investors easier access to international listings ·         Because of cryptocurrencies there will be no need to deal with different banking systems ·         It will allow the process of purchasing or selling a piece of real estate to be more efficient and accurate ·         Its already happening HOWEVER FAMILY OFFICES SHOULD BE AWARE THAT ·         Some cryptocurrencies have gone under ·         There has been fraud associated with a few them ·     ...
Post a Comment
Read more

6 Things Family-Owned Real Estate Firms Should Know About Succession Planning

For the  family-run firms  in the real estate industry , a crucial concern centers around ensuring the longevity of the business they’ve spent years building and the assets they may have accrued. It usually means  the process  of prepping children to take over the business itself, as well as any assets in the firm’s portfolio.  NREI  consulted with attorneys specializing in succession planning for tips that family-run real estate businesses may want to keep in mind. About succession planning Among the chief goals of succession planning is providing continuity of management, in addition to minimizing the tax costs of transferring property interests to new generations, according to Bruce W. Tigani, attorney and chair of the tax, estates and business practice group at Morris James, a law firm based in Wilmington, Del. “Succession planning ensures the business has the capability of continuing profitability in case something happens to the owner or i...
Post a Comment
Read more