Looking for some examples of how a traditional family office might evaluate a deal versus a traditional middle market REPE fund or single asset syndication. I have experience in the REPE space and have been thinking about conceptually how priorities would shift if you were theoretically 100% of the equity versus using OPM.
Thinking investment horizon, estate planning, etc.
For example assume the FO has an existing portfolio, does it make sense to continue acquiring the same assets and building a larger portfolio of B/C assets or roll them up and spin out portions of the portfolio and trade up into more institutional class RE. Obviously different players etc. Thinking long term here.
Thanks!
At the end of the day it comes down to time. That is really the key difference. I can buy a property that loses money for 10 years because I want to redevelop the site in 10 years. Can a REPE fund or syndicate do that? Technically yes, in reality no. Their return of capital timeline is too short for that.
From my experience with family offices, they are a tad more conservative since they are playing with their own money (obviously some use outside investors too to supplement their own). They also tend to have longer time horizons since they are about being as profitable as possible for as long as possible and maintaining wealth. Some family offices do institutional sized deals, but I wouldn't say that's the norm. Deals tend to scale as the company does better and if the FO is getting a lot of money in fees and promote, they have more capital to deploy to go for larger assets.
Family office = family wealth preservation
REPE = investor wealth accumulation
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