Family Offices seek to re-shape the property market
The wealthy investors behind Europe’s leading family offices are seeking to “re-shape” the way they engage with the European property market, with the aim of securing higher returns ain a transparent way, and at lower cost than traditional property funds.
A group called FORE – Family Office Real Estate – is to launch a platform through which family offices can invest together and directly in commercial real estate.
A growing proportion of the €115bn of commercial property traded in Europe last year came from private investors and the estimated 6,000 family offices globally are amongst the most active and significant investors in this market.
London-based FORE’s partners are Basil Demeroutis, who has 20 years of experience in finance and European real estate and was previously a Partner of Capricorn Investment Group, a family office with over $4.5bn in total assets, and Peter Dove, who has been a leading figure in commercial property asset management for 30 years.
“Family offices are driving the shift back to core values and discipline in the property market which suffered from investor irresponsibility leading up to the financial crisis,” said Demeroutis.
“Traditional institutional investors, such as leveraged property and private equity funds, are becoming side-lined. Family offices are cutting out the middlemen and creating their own investment ideas, often in partnership with one another. This is to be welcomed, as it signals the return of a back-to-basics approach to investing in commercial property.”
For family offices to invest in property, traditionally there have been only two options: investing through a listed or private property fund or investing directly in property on their own. Family offices investing through property funds invariably complain about the lack of control of their property investments, high fees, low transparency and the difficulty of exiting from deals.
Semeroutis says the FORE model opens up another alternative, by pooling resources with like-minded families that share a common, long-term vision for the role property investment should serve in preserving and growing their wealth.
FORE will aim to do this while costing about half the fees of traditional funds. FORE will act as the catalyst for investors, finding the investment, carrying out due diligence, conducting negotiations, and then managing the asset and developing it into an environmentally sustainable and financially profitable investment.