Eyeing higher returns, family offices to amp up real estate investments

They are increasingly cutting out private equity firms

TRD MIAMI /
May.May 04, 2017 11:30 AM

New York skyline (credit: Getty)

From TRD New York: Family offices are increasingly cutting out the middle man and directly investing in real estate and operating businesses.

A new survey by the Family Office Exchange found that 81 percent of family offices have at least one person scouting out direct investments, Bloomberg reported. Driving this focus is the feeling that hedge funds, bonds and stocks will produce lackluster returns. Family offices reported an average 7.2 percent return in 2016.

“The one place family offices think they can still generate double-digit returns is in operating businesses and real estate,” Kristi Kuechler, president of the Family Office Exchange’s private-investor center, told Bloomberg.

Returns on real estate averaged 9 percent last year, according to the survey. By directly investing in real estate and the like, these offices can also avoid fees charged by private equity firms (2 percent for annual management and 20 percent of profit).

Last year, average allocations to hedge funds dropped to 10 percent from 12 percent in 2014, according to the survey. Most of the families surveyed indicated that they didn’t plan to increase such allocations going forward.

The family office of Michael Dell, MSD Capital, has been an active investor in New York City real estate in recent years. It purchased a stake in Grand Central Terminal and participated in the $219 million Sharia-compliant loan Sharif El-Gamal landed last year for the shaky condo project at 45 Park Place.

Billionaire Steve Cohn has a personal fund — Point72 Asset Management — that plans to lease 175,000 square feet at 55 Hudson Yards. [Bloomberg]Kathryn Brenzel


Related Articles

arrow_forward_ios
2965 West Corporate Lakes Boulevard and Black Creek Group CEO Raj Dhanda (Credit: Google Maps, Blue Vault)

TIAA sells Weston warehouse for $33M

Neil Merin

NAI/Merin Hunter Codman, partner raise fund with plans to invest $200M in CRE

State report finds open gas valve fueled building explosion at Plantation shopping center

State report finds open gas valve fueled building explosion at Plantation shopping center

Bayside Marketplace is planning another high-rise entertainment venue with a view

Bayside Marketplace is planning another high-rise entertainment venue with a view

Construction of downtown Hollywood high-rise may start soon

Construction of downtown Hollywood high-rise may start soon

South Florida firm, partner acquire Tampa office building for $29.4M

South Florida firm, partner acquire Tampa office building for $29.4M

Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Developer borrows $105M, breaks ground for mixed-use Flagler Village project

Moishe Mana plans mixed-use project with logistics theme next to airport in Panama

Moishe Mana plans mixed-use project with logistics theme next to airport in Panama

arrow_forward_ios
Loading...