A recent article published by CNBC revealed that the number of single-family offices, which are organized entities that represent family wealth generally of $100 million and higher, is projected to rise from 8,000 to roughly 10,720 by the year 2030 based on estimates from Deloitte. The assets of these families have grown tremendously over the past several years and the overall wealth accumulation is expected to exceed hedge funds within the next 5-6 years. The article further details that the most rapid family office expansion has been in North America with growth projections at 258% between 2019 and 2030.
Implications for Senior Housing & Care
While invested assets can vary dramatically across family offices, a 2023 Campden Wealth report indicated that 25% of North American family offices intended to increase their allocations in real estate. For those family offices wanting to retain a certain balance of real estate investments in their portfolio, senior housing is a more favorable property type in today’s market than some others such as commercial office and residential. While there are currently no exact statistics on the number of family office investments in senior housing, those relationships do exist, and anecdotal reports reveal the potential opportunity for more.
There is a natural alignment between family offices and operators who are looking for capital partners:
- Family offices are generally longer-term investors, which can provide
- Given their structure and autonomy, there is also often greater flexibility in how the deals and relationships are structured.
- While returns are important, family offices may also find the mission of senior housing and care appealing. These family offices appreciate investments that fuel meaningful work and, like many of us, they have often experienced the need to find housing and care for an older loved one, so have first-hand exposure to the sector.
Direct family office contacts can often facilitate these relationships along with the wealth management advisors who serve the specific family offices. Those exploring family office capital may look for individual family office investments or even a pooling across more than one family office. These investments are often an equity investment, but family offices may also be a vehicle to tap into private credit. While most senior housing investments are geared towards real estate, there have been instances where the family office has invested in the operating company as well. The sector has long been seeking capital partners for operations and this could be one potential pipeline for those arrangements.
The growth in family offices should be on the radar of those in senior housing and care. Attracting capital from family offices into senior housing can be a viable strategy given the alignment across several key goals. NIC will continue to track family office trends and work to educate family office constituents about the sector and potential alternative investments.