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The family offices of investors with a high network geram are increasingly bringing their money into alternatives, and real estate are at the top of their list. For some instead of going alone, joining for apartment offices.
With the apartment office model, these investment weapons can bundle resources, spend specialist knowledge and unlock larger offers. With more than 12 billion US dollars that manages, Realm is a multi -family investment platform that specializes in commercial properties. The typical family that Realm uses has investable assets of around 200 million US dollars.
CNBC spoke to his CEO Travis King. Here are some highlights from the conversation, edited for length and clarity:
Real estate game: Why are apartment buildings go?
Travis King: We are better investors together than individual. This means that we not only combine capital, but also our collective trustworthy relationships, industry knowledge and geographical knowledge in order to find and implement better investment decisions.
They have seen great assignments among the institutions. In some cases, they have all expanded their real estate allocation of low individual digits to some cases 10% or more into allocation. You still don't see this with many family offices, although there is a strong desire to do this.
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So I think that the next horizon will find ways to access direct real estate with these families that enable them to diversify a little more and to enjoy some of these advantages of real estate that were somewhat difficult to grasp, unless they actually wanted to buy this real estate itself, which can tend to be very intensive in time, and it requires a rather large, committed staff.
PP: How do you play real estate?
TK: Real estate continues to develop, right? There is never one thing on which you want to concentrate in real estate. I think that's part of what gets us a leg. … you heard the saying “place, place, place”, and that's right. I think this is still a very true saying. What we find is that we are unique in that we move through the real estate type and geography. In view of the size that we have as an organization north of $ 12 billion in investable assets among these families with which we work with, in many different areas north of $ 12 billion.
There is a macrocycle in real estate and this cycle is always very important. They don't want to swim against the flood. You don't want to, you know, try to combat the cycle. But there are microcycles that occur in different regions and in different types of property. So that's an important thing.
PP: What is your favorite of the many Cre sectors?
TK: If you look at this time, what we think is interesting is starting with the office. I think in many areas we start that an office is in an area in which we believe that the pricing has somehow reached soil. And you know that if we look at some of these investment decisions – we are just looking at one in Northern California – less of “Hey, would we like that if it were only a little cheaper?” And it comes to the point where this is no longer the question. It really goes to say: “We know that it is cheap. It is cheap in itself. 'In some cases, we buy things 15% of the replacement costs.
Realm CEO Travis King
With the kind permission of the empire
PP: Where do you stay away?
TK: What I try to keep myself away from broad categories, right? For example, say that F&E or industrial will be over, for example. Cycling these things and there will be different times. So I think the market, on the whole … you look at things and say: “Ok, data centers, you know, they have been invested, and now there is too much capital in data centers.” In particular, we are not really in data centers in a large way because we concentrate on this lower middle market.
PP: Isn't everyone in data centers?
TK: Yes, but they are the big boys in data centers, right? I try to find an angle in which we have something that others don't do. If you look at the big boys who have tens of billions in your fund in order to invest, many dollars are required to do the infrastructure in the data center. We really focus on a kind of $ 50 million and below because we feel like we have an advantage there. So yes, everyone is in data centers, but it is one of these things in which many people say: “Wow, there is a lot of money to pursue this. It could be late in the cycle. 'I will probably agree, but it is only outside the area where we try to invest.
PP: How does your business change when interest rates are falling?
TK: I would say that the reduction in interest rates helps real estate in most respects. I think it will primarily help the transaction volume. I think it only offers a wind for the sail of transactions and increases the value of all properties.