Real estate capital raising and syndication
How Five Real Estate Firms Raise Capital for Deals
Real Estate Investor Success Stories: Hear from 5 real estate investment firms who have raised ov...
Real estate sponsors who want to see how experienced operators find deals, meet investors and structure equity and debt.
Worth quoting
"I do a lot of public speaking, not only for investor conferences, but for self-directed IRA conferences, for the storage industry, etc."
"The conversation starter is immediate, but the relationship is the long term."
"We always buy thinking there's a recession around the corner. So, we're very conservative. We keep tons of cash available."
The short version
Family office data opens this panel. About 75% of family offices invest in real estate, and it averages about 25% of their portfolio. The host advises asking real estate investors whether they also invest outside the sector. Five firms then describe their work in self storage, office and hotels, and how each one raises equity.
The panelists cover off-market sourcing, conferences, CRM systems and word of mouth. They also discuss why hotel owners returned to family office partners, how revenue management affects pricing, how selective they are on ground-up development, and how one firm cut its debt cost by recapitalizing.
From the source
- The office firm did about $600 million in deals in the year, with about $200 million of that as equity.
- One storage sponsor has placed $35 million of private equity in three and a half years and has about $10 million deployed across seven deals.
- One sponsor is refinancing bridge loans at about 6.6% into debt at 4 and a quarter, while the hotel group typically uses 65% leverage.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Real Estate Investor Success Stories: Hear from 5 real estate investment firms who have raised ov.... Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around offering documents, investor eligibility rules and recapitalization structuring. Do not use AI to write your own legal agreements.
What stood out
- Source deals off market. The self storage firms say they buy off market because, in their estimate, about 50% of that market is owned by mom and pop operators. Some owners do not know the right price, so one buyer was under contract on a property almost $1 million below its value.
- Marketing starts conversations. One storage sponsor speaks at investor, self-directed IRA and storage conferences. The speaker says the attention-getting jacket opens talks, but the relationship and the track record do the long-term work. In 3.5 years the firm placed $35 million of private equity.
- A track record can make you a preferred buyer. The office firm says it has closed 100% of its deals, which made it a preferred buyer. Its investors already back many deals, but it expects to need more equity as deal sizes grow toward about a billion next year.
- Family offices can hold longer. The hotel group has worked with pensions, endowments and private equity. It found private equity partners sometimes need to exit on a mandate, while three or four family offices may hold a deal generating 18% cash on cash.
- Recapitalize when the cycle allows. One storage sponsor is four years into its cycle and is recapitalizing four assets. Bridge loans at about 6.6% are being refinanced at 4 and a quarter, and the sponsor describes a path where some investors who want out may exit while others stay.
Related questions
- How much should a real estate sponsor charge in fees?A common structure I see is a 6 to 8 percent preferred return, then 20 to 25 percent to the sponsor, with higher splits above a second hurdle.
- How do I structure a real estate syndication for investors?Start with a clear split between sponsor and investors.
- How do I raise capital for a hotel purchase?Many hotel buyers fund the equity through joint ventures with family offices and wealthy individuals, then add debt on top.
Questions about this video
How much of a family office portfolio goes into real estate?
According to the host, 75% of family offices invest in real estate. On average it makes up about 25% of their portfolio, with the rest spread across other asset classes.
How did the storage sponsors find investors?
One sponsor uses public speaking at investor, self-directed IRA and storage conferences. A CRM database organizes contacts, and the firm describes a $50,000 per unit investment level while also working with small family offices writing $1 million to $2 million checks.
Why did the hotel group move back toward family offices?
Private equity partners can need to exit at a set year or metric because of a mandate. Pensions may not want to hold through a down cycle, while a group of family offices may hold a deal that is performing well.
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