Register Today For Alts Expo - Dec 8th
The Real Estate Family Office and Private Wealth Management Forum (East) is organized annually by IMN, with the 2022 conference taking place in Miami, Florida.
AltsDb co-founder Andy Hagans joins Jimmy Atkinson with live reporting from this exciting event.
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About The Alternative Investment Podcast
The Alternative Investment Podcast is a leading voice in the alternatives industry, covering private equity, venture capital, and real estate. Host Andy Hagans interviews asset managers, family offices, and industry thought leaders, as they discuss the most effective strategies to grow generational wealth.
Jimmy: Welcome to the Alternative Investment Podcast. I’m Jimmy Atkinson, joined today by co-founder of AltsDb, Andy Hagans. And we’re coming to you live on-site at the IMN Family Office Real Estate Forum in beautiful, sunny Miami, Florida this afternoon. Andy, how are you doing today?
Andy: I’m doing great. I love Miami. It’s a great town.
Jimmy: It absolutely is. And Andy, tell us a little bit about the IMN Conference we’re at today, why we’re here.
Andy: Yeah, you know, IMN puts on a great family office conference. They put on, I believe, two a year. And so this is the East Forum. And this conference really gathers families, so both principals as well as executives in family offices on the one hand, and on the other hand, you have service providers and you also have fund issuers and sponsors and a lot of asset managers. And, you know, a family office forum, it’s a little bit of a smaller conference. It’s not some giant mega-conference. It’s a little bit more intimate, you know. There’s a little bit more privacy, really allows those good conversations to take place. I think families are very communicative, cooperative. So it’s just great to gather and catch up with people.
And, you know, Jimmy, one thing I do wanna say, obviously, there’s been a ton of turmoil in the markets in the past couple of weeks. It’s been, frankly, a bloodbath this year in the bond markets and the equity markets. I am not seeing any pessimism at all. I think families are seeing a lot of opportunities to, you know, preserve wealth, to grow wealth. And frankly, in a lot of ways, it’s a better investing environment. Maybe not in terms of getting debt and financing with debt, but in terms of I think there’s a lot of expectation that assets are starting to get repriced and that there’s gonna be a lot of opportunities in the year ahead.
Jimmy: Yeah, out of crisis can oftentimes emerge opportunities for sure. Well, Andy, what do you think? Should we head back upstairs and come back down here for part two a little bit later today or what?
Andy: Yeah, the next session is direct investing, so I wanna go check out that session and then let’s come back and record some more content.
Jimmy: Sounds great. We’ll be back soon.
Welcome back. I’m Jimmy at AltsDb. We’re still live at the IMN Conference today. And Andy, we’ve been upstairs in the sessions for a few hours now. We’ve talked to quite a few people. You’ve been talking to a lot of families and sitting in on some of these family office sessions. What’s the take? What are you hearing what families are doing with their dollars these days in the market the way that it is?
Andy: Yeah, you know, as you say, I’ve sat in several sessions. I’ve also talked with several family offices, and, you know, every family office is obviously different. Every office has its own, you know, unique investment philosophy, the way they do things. But I am hearing some themes over and over. Number one, even though the markets are obviously in turmoil right now, the country’s in a recession, no one is panicking. And I think families are focused on where’s the opportunity, right? When you’re managing capital in a family office, you know, you’re thinking about preserving capital, but also you have that long-term time horizon, and you have the flexibility that a lot of institutional investors, quite frankly, don’t have.
So the first theme that I’ve really been hearing a lot about is global opportunities because we have, you know, the strong dollar and then there’s this kind of uncertainty in the US real estate market. The sense that I’m getting, and, frankly I do personally agree with it, is that due to the macro environment, due to interest rates and inflation, everything where it is right now, we’re still all sort of waiting for assets to get repriced, and that isn’t necessarily happening. So with the dollar being so strong, I think a lot of families are looking overseas, especially in Europe, and they’re looking at this as an opportunity to get involved with projects at attractive financial terms with financing, and also potentially more attractive valuations because, obviously, there’s some fear in the US markets, but I think there’s a lot more fear right now in the European markets. And of course, that fear creates opportunity.
Jimmy: Yeah, for sure. Interest rate’s way up here in the US over the last few months. It seems like the Fed keeps raising rates by 75 basis points every time they meet. What’s happening in Europe, though? Is the dollar still very strong there? We’re seeing European currencies come down in value relative to the dollar. Tell us more about that and what you think those opportunities might be for some wealthy families.
Andy: Well, I mean, especially with the UK, the US dollar against the British pound right now, we see in the UK, they are flirting, I suppose, with the pension crisis, and that’s causing a lot of uncertainty with that currency. So I think a lot of families are just being flexible right now, right? Essentially, some families at least, maybe not all, but several that I’ve talked to here today, they have cash ready. They have dry powder ready. But the interesting thing is they’re not all ready to deploy it like tomorrow. I think the sense I’m getting is like Q1, Q2, even Q3 of next year is when they’re thinking that’s gonna be the time to deploy when perhaps asset prices are going to fall a little bit further. So, I mean, I think that’s a lesson. Obviously, for a family office with that different time horizon, different amounts of investible capital, it’s gonna be a little bit different for a family office versus an everyday, high net worth, accredited investor.
But I think a lot of investors right now are hoarding cash. You know, and I’m never one to counsel investors or advisors or wealth managers to try and time the market, but I have to say it does feel like it’s a good time to have cash, whether it’s upcoming in Q4 or into next year. I think there’s gonna be a lot of opportunities, especially when you compare valuations to where they were a year ago. I think we’re entering at the very beginning end of a buyer’s market where, you know, things could really shift overnight, especially if we see those further interest rate increases that you alluded to.
Jimmy: Yeah, especially as we wind down Q4 here in 2022 and head into Q1 of 2023, potentially we’ll see that repricing. Of course, there’s risk to holding cash, Andy, right? Because if you’ve held cash for the last year, your cash is worth 8% less, 9% less than it was a year ago, depending on who you ask. But do you think it’s still maybe a wise idea to hold a little bit of dry powder for that repricing?
Andy: You know, that’s so interesting that you say that, Jimmy, because everything I just said in our recording just now, take it with a huge grain of salt because I think it depends so much on locality and sector. So I think in some localities, in some sectors, everyone is expecting very significant repricing, and frankly, we’re seeing it already. We’re already seeing the repricing in certain sectors, certain MSAs that got way overheated. And then there are other MSAs, other sectors where the market, the asset prices are surprisingly resilient. So in real estate, it’s all local, right?
Jimmy: Yeah, it’s absolutely local, and you’re absolutely right. I mean, certain markets’ prices have gone up. Certain markets’ prices have come down. And we have shortages throughout the country in terms of housing. I’m thinking of, now, multi-family housing in particular, right? But certain markets are affected worse than others.
Andy: Yeah, and depending on the asset, the interest rate increases in the financing component of that is going to affect the asset price. The asset price will be much more sensitive than in other sectors and in other markets. So again, the trend that I’m seeing is no one here at this conference seems depressed. No one is panicking. No one seems scared. Everyone is…it’s like we all have this expectation of what’s gonna be the biggest opportunity, because it really feels like there’s gonna be a lot of tremendous opportunities in 2023.
Jimmy: It’s absolutely an incredible time that we’re in right now, I think. I think we’re on the precipice of something big. We’ll find out as we turn the calendar page over the next few months. But that’s all we have for right now. We need to head back upstairs pretty soon and do some more sessions up here at the IMN Conference in Miami. And as always, please subscribe to us on YouTube or your favorite podcast listening platform to always get the latest episodes. And of course, I’d like to also take this opportunity to thank IMN for partnering with us and us partnering with them as an official media partner at today’s event. So thank you very much, IMN.