Arabic version: ارتفاع الفائدة يجعل المكاتب العائلية أكثر انتقائية في العقارات

According to Cnbc, higher interest rates are making family offices more selective in real estate, pushing many toward heavily discounted properties and assets with strong pricing power. Chief investment officers said wealthy families continue to view some real assets as potential inflation protection, but are raising their standards for new deals.

Rob Haugen of Michels Family Office said uncertainty over the direction of rates has made the firm more selective. Haugen, who oversees private capital investments, mergers and acquisitions and is chief investment officer of spinout firm River1 Asset Management, said the office prefers only “really special” projects until it has strong conviction that rates are headed down. He typically targets opportunities with potential yields on cost in the high single digits or double digits.

Haugen said an office building bought at a heavy discount, with a known tenant set to occupy a large share of the property, can fit that approach. He also identified big-box retail spaces as an opportunistic area. About a year and a half ago, the family office bought a Kohl’s near Milwaukee with an investor consortium.

Joel Houck, chief investment officer of HB Wealth, said large family offices have shown greater interest in real estate and real assets including industrial warehouses, farmland and timberland. He said their inflation-hedging potential depends on pricing power and deal structure. Industrial properties and housing can allow regular rent increases and may benefit from supply constraints, while rental rates in multifamily, industrial and retail reset at different rates.

Houck also said investors must monitor debt levels even when higher rates create discounted buying opportunities. HB Wealth generally steers clients away from funds with leverage above 65%, whether at the operating-property or fund level. Family investors are also asking about data-center-related real estate, but some remain cautious about long commitments. Haugen is wary of 10- to 15-year lockups at high rates, while Cresset chief investment officer Mike Silverman said technology change could leave a data center less valuable when a 15-year lease ends.