Family offices seek to reshape property market

These high net worth individuals are now looking to shake up the way they invest in property with the aim of securing higher returns in a transparent way and at a lower cost than traditional property funds. In response to this, the Family Office Real Estate Partnership has today announced the launch of a new investment “club”, which is an innovative platform through which family offices invest together in commercial real estate directly.

Basil Demeroutis, Managing Partner of FORE, says:

“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. 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.”

A growing proportion of the roughly €115bn worth of commercial property traded in Europe  last year came from private investors. The 6,000 family offices scattered around the globe are amongst private investors who now make up a greater percentage of investment volumes than at any time in recent memory.

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 that choose to go through property funds invariably complain about lack of control of their property investments, high fees, low transparency and the difficulty of exiting from deals.

The FORE model opens up a third alternative, pooling resources with like-minded families that share a common, long-term vision for what role property investment should serve in preserving and growing their wealth. FORE does this while at the same time being about half the cost of traditional funds.

London based FORE has devised a new approach which allows family offices to invest together directly in properties through a pool or “club”. FORE acts as the catalyst, 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 for its club members.
 
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.

Peter Dove, Partner of FORE says:

“We seek out deep value, which means that stock selection and asset management expertise are essential skills that we, at FORE, deliver. Our team has 95 years of combined experience in the sector and have seen many cycles. We believe the days of financial engineering driving the property market are finished.

"Over time, what we will see is sensible stewardship returning to the market, through the increased participation of family offices, whose primary concern is investing for the long term and protecting wealth rather than speculation.”