Family Office Real Estate Blog

So “family offices” are increasing, but are they??  What is the classification of a family office?   From spending the last five years working for a family office, I think I can tell you.  An this is not just from my understanding but from seasoned veterans who were in this space before anyone outside of the “club” ever heard the word family offices. $250MM in assets and they not only have investments to deal with (which I like to call the hard side (investment side) but also the soft side which deals with the family issues.     Governance, generational issues, tax planning, legal planning, internal family issues per se.   All of the things great wealth can bring outside the investment side. Outside of the net worth number ($250MM), I also think you can distinguish if they are a real family office by asking the question.   Are investments made from a company checkbook or the personal checkbook of the family??    If it is...

In my last two blogs, I went through why family offices are not investing in opportunity zones…………….at least to the extent that everyone thought they would be.    So who are the ones who are investing in these real estate opportunities?   That is the institutions and the high net worth individuals.    But I see a problem coming down the road with these high net worth investors.     I don’t think they know what is coming down the pike in the next seven years.   Let me give you an example.    So I have $500K in capital gains that I invest.   Well, in year 5, 10% of my capital gains are forgiven.   In another two years another 5%.   So in total, 15% is forgiven on the $500K, which is a total of 75K.    So now I am left with a tax bill of $425K.   So where is that money going to come from for them to pay the taxes????   Remember these are high net worth investors, not family office type capital. ...

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 In the last blog that I wrote I discussed how family offices are not investing into opportunity zones, and based upon a study I did through the Family Office Real Estate Magazine – ONLY 17% of the family offices said they were going to.   The first reason I mentioned was a lack of understanding of the zones 100%.   The second reason and the purpose of this blog is to explain the 2 nd reason why family offices are not investing in opportunity zones.   The deals aren’t that great.   For example I was looking at a ground-up constitution (great opportunity for higher returns than an in-place asset), of a Class A apartment (great property type for demand)  in North Hollywood (great location) with a seasoned operator (great experience) who was well personally invested (great alignment of interest) and yet the deal didn’t make sense.   The target was 16.5% with a 13.5% preferred return to an investor.  On the surface, this al...

Great article on Family Offices and Wineries. Be sure to read the new edition of the Family Office Real Estate Magazine  August 2019 Issue of the Family Office Real Estate Magazine #realestate   #familyoffice   #familyoffices   #familyofficerealestatemagazine   #wineries #singlefamilyoffice   #djvankeuren  

In a study that I did at the beginning of this year, I asked over 100 family offices what their plans were for investing in opportunity zones.  The results were staggering.  17% said they were going to invest into an opportunity zone deal, the remainder reported no or maybe.   Now at the time, the regulations were not out, so that was a huge reason for many families to be sitting on the sideline, but now that they are out why are these numbers still holding up?   Well, I think there are a few reasons.  The first is I don’t think there is a distinct understanding of the nuances of opportunity zones by family offices.   I have spoken on this topic so much, or written articles or been interviewed on shows and podcasts and I have an excellent understanding of what these include and the benefits, but there are still nuances I don’t understand exactly.  One of the things that come up in sales is if something is hard to understand the person ...

Working for a Single Family Office, I have the fortunate opportunity to speak with and look at many deals with other Single Family Offices. The issue that many Single Family Offices have is the ability (or inability in many cases) to do the due diligence that is needed. Why? It primarily has to do with the lack of expertise in the area that they are reviewing. Now, this is understandable for several reasons. Maybe they made their money in steel or fashion, or chemicals and sold out after building that business over the last 40 years for a few hundred of millions of dollars. I am pretty sure that if you were to ask the Patriarch about a deal that you were looking at in their area of expertise, he could size up the opportunity in a matter of just 5 minutes. Lets be honest, these Patriarchs / Matriarchs are very very smart intelligent successful people. But to be able to get into the nuts and bolts of investing into a hedge fund, a private equity deal or a real estate transaction...

I often speak to a fellow family office colleague, and they will ask me, “what conferences do you suggest I attend?”   I then proceed to ask them “what exactly are you looking for from a conference?  Is it deal flow?   Meeting other families?   Education on best practices? “   Being able to answer that question as a family office will dictate which conferences you should attend.     The best educational conference for family offices that I have been to is the Family Office Association, which is led by Angelo Robles.  What I do go onto say is “the information that he provides for families on the back of his website is unmatched”  This is really where the education lies and is worth the price of admission.    Knowing what you want from a conference is probably the most important thing you need to know before signing up.  The best way to find this out???  Ask another family office.

There are a lot of family office conferences every year.  I believe that these type of conferences will continue to grow as people want to get in touch with these “family offices.”    Campden research recently came out and said that there had been an increase in family offices from last year alone.   Along with the rise in family offices, so will be the capital that they will have to invest.  So are these conferences helpful in meeting these family offices?  That depends.   The reality is family offices want to go to conferences to ………….well meet other family offices.  That is the main reason.  Do they want deal flow?  Yes, but to what real extent?  That is the question.  The fewer sponsors that are present, the more family offices that will come.  I don’t ever see that changing.

In Chicago getting ready for my panel at the Midwest institutional real estate Investor forum representing family offices

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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...