Reasons To Watch International And Family-Office Investors

NEWPORT BEACH, CA—There is a tremendous amount of capital from both international and family-office investors wanting to participate in the US real estate market, and they can participate by aligning themselves with best-in-class sponsors and in other ways, Landmark Capital Advisors’ president and managing director David Kidder tells The firm believes so strongly that international and family-office investors are becoming among the most-recognized sources of capital complementing traditional capital that it has hired a director of capital relationships, Jack Hsu, to increase its fluency in this space. We spoke exclusively with Kidder about why these groups are an important part of the firm’s growth strategy and how sponsors can nurture these capital relationships. Why are international and family-office investors an important part of your growth strategy?

Kidder: We believe international and family-office investors targeting the US residential and commercial real estate market will continue to gain momentum over the years to come. Commercial banks remain under tight regulatory scrutiny, reducing their capacity and desire to provide financing. Equity funds continue to grow in size, causing investment minimums to increase in scale. As we often discuss, there is currently a complementary opportunity evolving in the structured-finance and sub-institutional-equity space for international and family-office investors who are well positioned to take advantage of this market opportunity. Why is this particular subset of investors well positioned to capitalize on the opportunity within the real estate finance sectors?

Kidder: There is a tremendous amount of capital from both international and family-office investors wanting to participate in the US real estate market. Because this capital is generally more flexible in terms of investment mandates compared to traditional closed-end funds, they can have a wider perspective in pursuing different risk/return profiles across the capital structure. Additionally, they often lack the internal resources and local expertise to originate and execute real estate business plans independently on a direct basis. Therefore, they can participate in the market by aligning themselves with best-in-class sponsors and providing liquidity to segments of the market that have traditionally been underserved. How can sponsors nurture these capital relationships?

Kidder: Since it is typically a long engagement with both international and family-office investors, we believe it is important to have dedicated resources focused on fostering these relationships. In the case of family offices, their primary focus is the preservation of wealth, instilling a cautious and diligent approach to pursuing opportunities, especially with new relationships. By adding Jack Hsu to our team, we gain more than 17 years of international and domestic finance experience, as well as a bicultural background. With Jack’s knowledge of Mandarin Chinese and Japanese, we are able to better support and establish trusted investor relationships on behalf of our real estate sponsor clients. What else should our readers know about international and family-office capital relationships?

Kidder: International and family-office investors have unique and constantly evolving risk/return objectives and want to be informed as to the different investment opportunities that exist in the market. By maintaining close contact with these investors, our goal is not only to address structured finance and sub-institutional equity opportunities, but also to fill other capital voids in the market such as core plus investment strategies and longer term yield plays. As capital becomes increasingly borderless, our objective is to better serve our sponsor clients by aligning them with flexible and difficult-to-access investment partners.