A real estate family office is an entity entirely dedicated to the wealth management of a wealthy family. These offices tend to develop today, because they meet the specific management needs of this clientele, by ensuring proximity, independence and confidentiality.
What is a real estate family office?
A real estate family office is a structure, generally of small size, entirely dedicated to the management and the development of the property assets of a "big family".
TheAFFO (French Family Office Association) estimates that their services are generally aimed at clients with financial assets of more than 10 million euros. Many of them are based in Paris, even if their services are generally aimed at an international clientele.
A real estate family office can be an independent structure, or a service offered by a CGP firm, an investment bank or an investment company like Ever Invest. It is never a management company, for obvious independence reasons. Nevertheless, the partners of a family office have generally already completed a personal career in banking. They are therefore familiar with the financial world and are able to provide expert advice in this field.
The activity of a real estate family office is divided into 3 main parts, all focused on the development and the perpetuation of a family patrimony: rental properties, paper stone, participation in companies, etc.
Real estate investment
A family office will first build up and then enhance and preserve a family's real estate assets. This involves defining strategies, often focused on the perpetuation and transmission of assets. These strategies include: sourcing of assets, duration of ownership and date of planned resales, not forgetting the calculation of returns. The office also takes care of the risks with the banks from which it can request financing. We also provide advice on asset engineering, in particular to structure the estate from a legal point of view and to consolidate it financially.
Important point: a family office dedicated to real estate investment has an increased competence, given its destination, in all transmission issues. It also deals with intra-family mediation issues.
The office then handles the rental management of these properties, with the choice of tenants, the inventory of fixtures on arrival and departure, the issuing and collection of rents, etc. It also manages the upgrading of these assets, with maintenance and repair work. In the event of problems with a tenant, it is he who negotiates and eventually sets up legal procedures.
A family office can offer a high-end concierge service, responsible for the stewardship of the family's assets: properties, vehicles, etc. It can also take care of the management and organization of events on its behalf.
The strengths of a family office
A family office always develops a close approach with families, and is able to evolve with their needs in terms of management and investment. Whether it is a rental property investment, or a professional or residential one.
A specialist in real estate
The core business of a real estate office is asset management. Its vocation is to face the financial stakes of a large family, by confronting sometimes complex legal, fiscal and inheritance issues. The great challenge of the office will be to initiate the best decisions for the common patrimony, while preserving always and above all, the unity of the clan. One of the main characteristics of the office's support is extreme confidentiality.
The remuneration of a family office is transparent and corresponds to fees, and not to the remuneration of financial products subscribed by the family. It is also not, in principle, linked to the size of the family's assets. At the banking level, the office will act as an intermediary and will work with a minimum of 3 custodian banks.
The last interesting point is that its operation is not set in stone. The professionals remain attentive to the needs of the family to which they are attached, and constantly adapt to the development of their projects.
What characterizes the investor profile of families is above all prudence, because the primary objective of their assets is to preserve them. In 2022, the AFFO barometer revealed that 66% of family office clients had a balanced investor profile. Only 7% opted for a dynamic profile, and only 2% for an offensive profile.
It is therefore logical that investing in real estate is among the preferred investments of wealthy families. Its products were among the most represented in their asset classes in 2020 (16% representing direct investments and 2% funds). Private equity, unsurprisingly, also occupies an important part of this investment, but other tangible assets such as forests, vineyards or land assets are doing well.