Real Assets Adviser: The increasing presence of family offices in real estate: Growing portfolios are also expanding geographically

Written by RCLCO Principal Ben Maslan and Associate Sevan Douzdjian.

The current market environment has pushed family offices to look beyond the traditional asset classes of bonds and stocks. In the ever-present search for higher total returns with predictable cash flows, family offices have been expanding portfolio allocations toward higher-yielding alternatives and, in particular, real estate. This makes intuitive sense, as even in today’s pricey environment, cap rates are hovering above 6.0 percent, a healthy premium over the current dividend yield of 1.8 percent on the S&P 500. More than 560 family offices are either considering or currently investing in real estate, with a current or planned real estate allocation ranging from $5 million to more than $1 billion.