Candice Beaumont, chair of Salsano Group’s family office said, “Worst Is Yet To Come and estates are at the end of a nearly 20-year bull market and many family investors are ill-prepared for the tough times ahead. The stock and real estate markets have been on an upward trend for almost 20 years.
According to Beaumont, Increasing interest rates which oversee over $1.5 billion in assets from his Miami office, are paving the way for a protracted downturn in the stock market, commercial real estate and private equity.
Beaumont said, “The worst is yet to come, I think this is the beginning of a new paradigm and the beginning of a cycle where we’re in a multi-year contraction.”
Candice Beaumont of $1.5 billion family office says ‘worst is yet to come’ for stocks, real-estate https://t.co/xXLw5J8yBB
— CNBC (@CNBC) March 16, 2023
Beaumont, like many family offices, has substantial financial reserves in case of problematic sales notably in the real estate market. She revealed that the Panama-based Salsano Group has recently been inundated with inquiries from US property owners looking to unload commercial or residential properties at reduced prices.
Some wealthy hereditary families in New York City have approached us about selling their “trophy assets,” she said. They’re eager to get things done quickly, but they’re not yet in danger. But, we anticipate this development to extend over the next few years, opening up a plethora of new doors.
It needs to be powered by dry powder if at all possible. Higher interest rates have changed the financial landscape and family offices, like other wealthy investors are finding it difficult to adapt.
Notwithstanding the new interest rate environment, many significant investors(a Veteran of Lazard Freres (M&A) and Argonaut Capital private equity) have continued to invest heavily in real estate and other assets, according to Beaumont.
Sandro Salsano’s Real Estate Investment Strategy
Salsano Group was founded by Italian-born entrepreneur Sandro Salsano. In contrast to cash, treasuries, hedge funds, public equitiesand other investments where you can earn 4% or more risk-free and without using leverage, she recommended real estate for a 4% income.
Yet, Beaumont emphasized the importance of private equity due to its 35% IRR. With co-investments from sovereign wealth funds, the firm is creating a new free trade zone in Panama which is its largest project to date.
She explained that because of Panama’s location between the Atlantic and Pacific oceans, it serves as a major transshipment point for the US dollar economy.
In addition, Beaumont stated that Salsano is looking for agreements in Europe, where stock prices have dropped to attractive levels for take-private arrangements. She remarked, “The corporation is worth $100 million in Europe, but $2 billion in the United States”.
In Europe, often there’s a significant arbitrage into where things are exchanged, especially on some of these small European platforms.
Family office diversification is the top objective in the current environment, especially for new digital millionaires and billionaires, according to Beaumont, who serves on a number of family office councils and advisory boards and was once a world-class tennis pro.
“Many new families decide to settle in the affluent IT sector,” she noted. They have specialized expertise in the technological field and know it inside and out. She said:
“Yet, I believe it is critical to have diversified holdings. Some years it’s technology, other years it’s commodities and some years it’s distressed debt, but there’s a famous allocation chart that illustrates which sectors have historically outperformed every year”.
“Every year is a new experience. One of the main reasons why family offices should spread their investments around is because of situations like this”.
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