GettyGetty
So you have the perfect commercial real estate project laid out — the biggest one yet. Your team has spent months agonizing over every minute detail and put together the most beautiful pitch deck you’ve ever seen. They’re only waiting on you to bring in the capital to kick things off.
But your firm is already leveraged far too much to finance the whole thing with debt financing, and none of your private equity contacts are interested in partnering. Then you recall reading about how many family offices are located overseas and their frequent interest in real estate as an investment vehicle. Perfect, right? There must be plenty of foreign private wealth funds that are looking for a reliable and knowledgeable local U.S. partner, a match made in heaven. With your company’s track record and the in-depth research your team has put together, this should be an easy pitch.
Then why won’t any of them return your calls?
It took so long for your investor relations team to even find contact information for most of these “submerged whales,” so it’s not like the competition is too stiff. The few who even asked follow-up questions made it seem like you were committing some sort of faux pas in your direct outreach attempts. Sure, maybe you didn’t spend enough time studying all the cultural nuances of your prospects, but surely the desire to get in on the ground floor of a safe, lucrative investment is a universal language.
What They’re Looking For
There’s no one-size-fits-all approach to courting these investors. However, there are some common items most of these potential clients are looking for in their investments, even if the order of priority varies among them:
• More ownership, control, transparency and flexibility than is commonly found when investing in private equity funds or REITs.
• Long-term partners for a variety of missions and not simply a local operator for a one-time project.
• A preference for preserving wealth, at least when investing in the U.S. America is mostly considered a safe-haven investment destination for this group, rather than a popular source of new wealth. These family offices are usually heavily invested in emerging markets and see U.S. real estate as a necessary, albeit not so exciting portfolio diversification step.
• Complicating matters, every family will have their own objectives, passions, values and traditions that vary even among offices in the same cultural region.
How To Reach Them
I’m sorry to say there are no shortcuts here. If any intermediary promises you something along those lines, then you should be wary. In my firm, we’re chatting face to face and working small, relationship-building projects with multiple family office leads every day, but it still takes a while to organize even old-fashioned club investment deals.
Now, partnering with foreign family offices is usually a great win-win for everyone involved, and this requires something resembling traditional B2B sales strategy, as well as plenty of persistence and proactiveness. The three keys for this support network center on:
• A dedicated and different point of contact for each family office. I can’t stress enough how each of these organizations is so different from one another in goals and vision, and that’s before you consider personal rivalries or other issues between families.
• Multichannel outreach. From hosting conferences to publishing niche books and everything in between, you will need to maintain an authority presence in multiple venues for your outreach to really take effect.
• Local agent presence, at least part-time. The family might be world travelers and spend a sizable portion of their time in the U.S., but their family office likely isn’t. No conference call can replace real face time and relationship building with the family office’s key influencers.
How To Seal The Deal
So you’ve established a great team and put in the leg work. Finally, one of the key contacts you’ve cultivated in the family office, or directly with the family’s “inner circle” influencers, offers to arrange a lunch with the family’s prime mover. To make sure all that effort wasn’t for naught, you need to focus on three key elements:
• Adding a specific value: Everyone’s real estate project is “the next great thing.” There’s always someone with a better value proposition, at least on paper. So if you want to really stand out, then you have to show why they should invest in your firm, regardless of the project’s specifics. In particular, what added value does the team working this exact deal brings to the table? Why are they safer investing with you than with any other partner?
• Establishing a connection: This is about more than just building personal relationships, but also aligning your project with the unique values and objectives of the specific family office you’re working with. High-net-worth individuals (HNWIs) want to hear why yours goes the extra mile and can uphold their specific traditions and legacy better than anyone else’s. No matter how low-risk or high-yield your project is, you need to show them how your goals fit into their broader vision and get them excited about what you both can accomplish together.
• Nurturing trust: Granted, trust is the sum total of everything you’re offering and can only be built over time. However, two of the best ways to speed up the trust-building process are to show the client you have plenty of “skin in the game” and that are happy to seek outside assistance.
The long and short of this entire process is that raising capital from overseas family offices is a significant undertaking, requiring in-depth preparation and patience, and not a simple matter of getting your pitch into the “right hands.” So if you partner with the right facilitators and customize your investing approach for these HNWIs, you’ll be dipping into a vast and largely untapped pool of capital with little to no competition.