Jun 25, 2021

Growing My Family's CRE Investment Company

Looking for advice/suggestions on growing my family's CRE investment and management company.

A bit of background:

-Property located in the GTA, Canada (multifamily + some retail)

-Approx $150m in AUM

-No investors, we've done everything with our own money

-Been around for 50ish years (haven't grown much in the last two decades)

Aside from the traditional route (collect income and slowly buy more buildings), I'm interested in more creative ways of CRE portfolio growth. I've considered:

-Development (high risk)

-Property management for buildings not owned by us (not very interesting to me)

-Launching a hostile takeover of a small REIT and taking it private (not big enough to fund a takeover of any attractive targets)

-Raising investor capital

Any thoughts?

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5 Comments

Multif@mily4Life

RE

2y

Most Helpful

It sounds like you need cash to do investments. A couple of ideas around that:

I'd evaluate the potential to do some refi cash-outs on the portfolio from under-leveraged assets to get some dry powder.
Perform a hold sell analysis on all of your assets (mark them to what they would be worth today, forecast out their performance, and determine if they're worth holding) and determine ~20% of your portfolio to sell based on this.
raise outside capital as you mentioned (or invest additional money of your families if you have it)

From a strategy perspective

What would you say the core strengths of your business are? What do you do well?
Do you have conviction in a certain asset class/sector/geography? Start looking to place your "directional bets"

Hope this helps.

Authored by: Certified Real Estate Professional - Vice PresidentCertified Real Estate Pro

RE

2y

Thanks for the comment. Part of the trouble is that with the market so hot right now there isn't much point in raising capital (either through selling assets or outside capital) since there isn't anywhere decent to put the money (part of the reason I was looking into a REIT takeover).

Multif@mily4Life

RE

2y

Yeah it's tough, and while $150mm is a lot of personal family money, it doesn't get you that far in the public space.

Authored by: Certified Real Estate Professional - Vice PresidentCertified Real Estate Pro

RE

Associate 1 in RE - Comm

2y

$150mm in assets? Not much to do other than raise outside capital and make yourself the GP. I'm surprised your parents haven't done this yet. It's very easy to raise "country club money" if you have a track record. Probably easier than ever right now with stocks where they are.

Valuations are high right now - yes. But you take an acquisition and asset management fee from your "country club" investors so you're incentivized to do deals. Investors still want exposure to multifamily even when valuations are high (it's a diversification play).

If you're doing deals 100% with your own money, you're just leaving money on the table

Authored by: Certified Investment Banking Professional - 1st Year AssociateCertified Investment Banking Pro

RE

2y

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