Tishman Speyer, Raffles Family Office target $500m for first fund

US real estate firm Tishman Speyer and Asian multi-family office Raffles Family Office are seeking $500 million from private wealth investors for the pair’s inaugural regional real estate fund, PERE has learned.

With additional co-investment capital, the total investment capacity of Tishman Speyer/Raffles Family Office APAC Opportunity Fund I could exceed $1 billion. The vehicle has a fund life of six years and a maximum of two one-year extensions. The firms plan to begin investing the fund’s capital in 2024.

With the fund, Tishman Speyer and Raffles will target value-add and opportunistic investments within key real estate themes such as brown-to-green, residential, logistics, and special situations, including credit strategies and distressed opportunities.

Joe Kwan, managing partner and head of real estate at Raffles Family Office, told PERE that the timing of the launch was critical, as he believed 2024 would be a great vintage year for real estate funds due to the anticipated correction in the Asia-Pacific real estate market over the next two to three quarters. He consequently expected to see more buying opportunities as asset values adjust across the APAC gateway cities during this period.

Although Raffles Family Office started investing in real estate in August 2022, Tishman Speyer/Raffles Family Office APAC Opportunity Fund I is the multi-family office’s first real estate fund. Prior to that, the firm had been investing in real estate directly on behalf of its clients.

Kwan pointed out that private wealth investors have shown increased appetite for real estate amid their growing wealth. Indeed, the proportion of private wealth capital in total commercial real estate transactions increased from 28 percent in 2020 to 38 percent in 2022, according to MSCI data as of April 2023.

“As a full investment suite multi-family office, we are able to achieve diversification within a multi-asset portfolio for our clients, with real estate playing an important role,” Kwan said. “While many of the private wealth investors still like to directly own real estate assets, the variety of  asset types over a wider geographical coverage through a fund investment can be critical in achieving diversification.”

Meanwhile, the co-investment opportunities that come along with the fund also allow these private wealth investors to potentially co-own some of the assets to which they want greater exposure, Kwan added.

“The other reality is that some of the clients would not normally have access to some of the off-market/bigger ticket deals,” he said. “This fund essentially provides them [with the opportunity] to grow their exposure while mitigating concentration risk.”

Family first

The Tishman Speyer and Raffles partnership is the first alliance between a real estate manager and a multi-family office, according to Kwan. “Both Tishman Speyer and Raffles are privately held and Tishman Speyer is effectively a family-owned enterprise. We share similar DNA, in understanding the importance of legacy and value of building long-lasting relationships. This is further strengthened by the shared spirit of excellence, exemplary fiduciary governance and exceptional execution capability of the two teams.”

While Tishman Speyer will be mainly responsible for the fund’s investment activities, Raffles will be in charge of fundraising as well as some deal sourcing. Kwan noted that the fund will have access to some off-market investment opportunities presented by Raffles’ existing clients, as they need to adjust their portfolios from time to time. “This is a huge advantage we have over other market participants, including the larger institutional managers.”

Kwan said the biggest difference between a non-discretionary fund targeting private wealth investors only and one focused on institutional investors would be the speed in decision making and flexibility.

“Family offices can allocate their capital in a much quicker velocity than institutional investors. This is where I think our fund is at its best, because we are nimble, we are able to sniff out the best opportunity and we can transact, in my opinion, quicker than many institutions or many funds out there.”

Raffles and Tishman Speyer have set the fund life at six years, slightly shorter than the typical eight-year life for a private equity real estate fund. He explained that many private wealth clients prefer a shorter lock-up period for their capital, hence the shorter fund life.

Going forward, Kwan expects more family offices to want to work with established and reputable fund managers to help meet their ESG requirements.

“They [private wealth investors] understand the need for a good manager to be able to reposition the assets,” he said. “More families are looking out to pass the stewardship of their portfolio to people they can trust and [that can] outperform, not only in the present but over generations to come.”