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

Miami /
May.May 04, 2017 11:30 AM

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
Terranova’s Stephen Bittel with 93 Miracle Mile
Terranova plans retail-and-office project on Coral Gables’ Miracle Mile
Terranova plans retail-and-office project on Coral Gables’ Miracle Mile
Ytech's Yamal Yidios with 1500 Brickell Avenue
Ytech buys historic Brickell château, plans restoration
Ytech buys historic Brickell château, plans restoration
50 and 60 Northeast Third Street and 222 and 234 Northeast First Avenue (Google Maps)
Namdar pays $41M for downtown Miami apartment towers dev site
Namdar pays $41M for downtown Miami apartment towers dev site
Hollywood Locations' Christopher Ursitti and 1400 Northwest 31st Avenue (Hollywood Locations, Google Maps)
Movie studio complex may rise on former incinerator site in Fort Lauderdale
Movie studio complex may rise on former incinerator site in Fort Lauderdale
The Villa Paradiso at 1415 Collins Avenue and The Orchid House Hotel at 1350 Collins Avenue with Joe Nakash (Getty)
Boutique South Beach hotels trade amid heightened demand
Boutique South Beach hotels trade amid heightened demand
Unit 6A at 3315 Collins Avenue with Arvind Sanger (Redfin, PrathamUSA)
Hedge funders make a deal: Faena House condo trades for $15.5M
Hedge funders make a deal: Faena House condo trades for $15.5M
McDowell wants to build 201 apartments near Homestead, puts land under contract
McDowell wants to build 201 apartments near Homestead, puts land under contract
McDowell wants to build 201 apartments near Homestead, puts land under contract
Jackie Soffer with 2750 Northeast 199th Street (Google Maps, Turnberry.com)
Jackie Soffer’s Turnberry proposes office/retail project near Aventura Mall
Jackie Soffer’s Turnberry proposes office/retail project near Aventura Mall
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...