Latin American SFOs And MFOs Sending More And More Money Abroad As Inequality Issues Push Politics Further To The Left In The Region

Javier Vergara, MBA, director of Business Development at Castle Lanterra, a leading New York-based national real estate investment firm, recently returned from a meeting with more than 450 family offices and C-Level executives at the Family Office and Investors Summit in Lima, Peru.

Some of his takeaways from the two-day event include:

Single Family Offices (SFOs) and Multi Family Offices (MFOs) have diversified their portfolios outside their local core businesses and investments, with a  liquid component of mainly Money Markets, Exchange-Traded Funds (ETFs) and other funds and bonds. Most of these SFOs and MFOs are also investing in alternatives, including private equity, real estate and venture capital investments as a diversification tool and preservation of capital.

As inequality in the region pushes politics further to the left in the region, wealthy and even middle-class investors are looking for alternatives in anticipation of more political and economic upheaval. Investors in the region’s five largest economies pulled roughly $137 billion out of their countries in 2022 according to the Institute of International Finance, a group of banking institutions, which was 41% higher than the previous year. People and corporations are sending more money abroad in over a decade, and there has been a flight to safety due to capital markets stress with inflation and higher interest rates.

While there is no exact tracking of where the money is going, capital flows to the U.S. continue to be strong due to this political instability in Latin America. Other popular destinations include Spain, the Dominican Republic, and Panama. In the U.S., no place has felt the impact more than Miami, whose history and development are tied tightly with Latin America.

Real Estate in the U.S. has been an important part of this external investment, mainly through big funds with long track records such as Blackstone, but also through direct private syndications and direct property ownership. The expected returns for real estate investments have increased due to higher yields in risk free or low risk bonds and perception of higher risk in real estate. 

About Castle Lanterra

Formed in 2009 by Elie Rieder, Castle Lanterra (CL) is a privately held real estate investment company focused on repositioning multifamily communities, acquiring quality, new-construction properties and pursuing emerging investment opportunities in strategic growth markets throughout the United States. Mr. Rieder has bought and sold tens of thousands of residential units throughout the United States and is also responsible for managing his family office, which is diversified across asset classes. With an emphasis on intrinsic value and downside protection and a focus on achieving stable cash flows by implementing physical and operational enhancements, CL aims to maximize NOI and provide attractive risk-adjusted returns for its investment partners. Since inception, CL has completed over $3 billion of transaction volume across 12,000 multifamily units and over 890,000 square feet of commercial space.