In Real Estate- Rich California, Wealth Transfer Issues Loom
HOW DO YOU TRANSITION YOUR ASSETS?
Trillions in real estate legacy wealth, are now in play, as the baby boom population ages out of its “wealth accumulation” phase into its “wealth transition“ process.
DWC is now assisting some of California’s most prominent families to proactively anticipate and resolve business issuesspecific to their real estate wealth. Acting asa real estate resource, DWC is very careful not to displace the family’s legal or otherfiduciary/financial advisors.
Having served as a court-appointed fiduciaryfor decades, the DWC team is highly sensitiveto loyalty and confidentiality issues that areunique to legacy clientele. Understanding that the illiquidity of real estate wealth creates distinct issues, we also recognize the inclination to maintain it in the same species of legacy asset.
Based on our deep real estate experience,in all cycles, we have identified two distinctphilosophies in preserving and enhancing a legacy portfolio:
THE “AS IS” APPROACH
The focus is purely on cash flow preservation with limited redirection or application of new capital or reconfiguration of the asset base. This philosophy implements an ongoing attempt to keep operational costs low, avoiding tenant turnover, and suppressing property tax reassessment by minimal capital improvement to the property. Typically these portfolios consist of B and C classes where this is acceptable.
THE VALUE ADD / ENTREPRENEURIAL APPROACH
To improve portfolio value through a combination of new capital investment and active repositioning through a mix ofre-tenanting, re-entitling, refinancing orreallocation of assets. Typically, these legacy portfolios consist of more varied assetsincluding but not limited to class A buildingsand properties in the path of redevelopment.
Each portfolio is unique to its own attributes and characteristics and to the philosophy of the family. DWC is careful to collaborate with stakeholders and their advisors to appropriately create options and to ultimately transition real estate assets to the acquiring generation.
