Why Family Office?

Written By Rob Donnelly

Why focus on Family Office Projects for EB-5?

Let’s start with a definition. A Family Office (FO) is a formal construct whereby the assets of a wealthy family are managed under a defined business entity. Think of it as an asset management firm with only one client (itself).

FO’s are typically managed by both family members and hired professionals that bring specific areas of expertise and leadership. Often, there are one or more large closely-held operating companies that reside at the core. The objective is to preserve and grow family assets over multiple generations.

Although there is no real defined size criteria in terms of assets under management, the financial services industry typically starts at the $50 million level. For our purposes, we are working with Family Offices with assets greater than $250 million and, in many cases, over $1 billion in wealth.

Back to the question at hand, why FO’s for EB-5? Simply put, they are the safest path for a successful outcome of any that is available to investors - EB-5 and beyond.

Family Offices are the ultimate insider. Money and power are siblings in the vast majority communities or regions. Therefore, FO’s have more insight, access, and connections than any other group. They know and understand their local market better than anyone and can overcome potential challenges better than most. Investing along side that kind of strength is a tremendous benefit.

In terms of EB-5 specifically, Family Offices offer these unique advantages:

  • Projects are fully financed indepednent of EB-5 capital

  • Projects guaranteed to start or, even better, have already started construction

  • Financial security with EB-5 structured ed as debt that is senior to a strong equity buffer

  • Family Office’s have the balance sheet and cash reserves to fund and overcome unforeseen challenges

  • A long term investment horizon (multi-generational) means that projects are not materially impacted by short term markret or economic cycles

  • Family Office led projects will stand long after EB-05 investors have been completed the process and refunded their capital

In the end, it comes down to a straight forward and basic question. Would you prefer to invest with a real estate developer who is focused on personal gain, or a Family Office that is investing to build their legacy for future generations and has the financial scale to ensure success?

Top Image Reference: Dallas (1978 TV Show). Photograph: AllStar/Lorimar

Rob Donnelly
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