Family offices make opportunistic bets on real estate
CNBC • • business
Key Points:
- Ultra-wealthy family offices are increasingly investing in domestic real estate amid a stalled market recovery, leveraging their long-term investment horizons to acquire undervalued properties.
- Realm, representing about 100 families, invested $100 million in Northern California real estate, capitalizing on steep discounts like a San Francisco office bought at 21% of its previous trade value.
- Declaration Partners, backed by billionaire David Rubenstein's family office, raised $303 million for its second real estate fund and secured long-term leases in New York, benefiting from patience and flexibility unavailable to traditional asset managers.
- Surveys show mixed sentiment among family offices on real estate, but U.S. family offices are more optimistic, with 35% planning to increase exposure; inflation concerns drive higher allocations to tangible assets like real estate.
- Investors face challenges such as rising interest and insurance costs, but real estate remains attractive for cash flow, diversification, and tax advantages; some family offices avoid data centers due to pricing and environmental concerns, while others pursue distressed office properties for quick flips.
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