Our familyofficehub.io team often talks and writes about the “odd asymmetry” when it comes to single family offices (the investment firms of high net worth families): hardly anybody knows about them, but they are a real force in the European investment landscape. This is especially true for real estate markets. In this article, we will explain why and introduce you to some important real estate single family offices from our extensive database.
Real estate matches the family office investment approach
Many SFOs share the same investment strategy: wealth preservation, steady cashflows and continuity has priority over high returns. The family’s wealth should not decline at any price and the payouts for the family members should be generated. Real estate matches these prerequisites like no other asset class: leased buildings in good locations provide reliable payouts and the worth of the buildings most often remains the same or even increases.
Underestimated investment power through evergreen funds
While regular funds and private companies always have to budget their resources, Europe’s major single family offices can use their evergreen capital structure and almost inexhaustible funds. The sweet spot of many family offices lies between 5-15M€, core European cities and leased buildings are mostly preferred. A good example for the financial force of family offices is the major shareholder of the carmaker Volkswagen, Ferdinand Piëch. He builds up his real estate empire in Stuttgart, a city in the south of Germany. One large acquisition was the Hindenburgbau for 101 million euros.
Growing expertise in asset management and real estate development
Twenty years ago, real estate investments of SFOs were largely done through funds or investment managers, which still play an essential role today. But, meanwhile family offices often have built up in-house expertise when it comes to property investments. Especially for larger portfolios, the asset management fees thereby can be decreased and returns can be increased. The family office of the Brenninkmeijer family even established an own investment management company, Redevco. Also own development projects are playing an increasing role: Actris, a company led by Daniel Hopp, the son of SAP founder Dietmar Hopp, realized the large “Henninger-Turm” project in Frankfurt, Germany.
Through which investment types European family offices are investing in property
Property investments of family offices are done through different investment types and asset classes. Most common are directly owned buildings in different asset classes. Some family offices are especially attracted to landmark or historic objects in European core cities, while others prefer rather “boring” office space in B-locations. As said before, also regular funds and investment managers are relevant for the real estate investments of family offices. Furthermore, we can observe an increasing part of SFOs engaging in development projects and mezzanine financing.
Picture source: Andreas Selter
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