The Business of Family - Episodes Tagged with “Multi Family Office”

Tiho Brkan – The Most Interesting Man in the World? Second Passports, Territorial Tax, Mezzanine Finance + MFO Investing

Mike Boyd — Mon, 22 Feb 2021 19:00:00 +1000

Tiho Brkan is back for a second conversation about family office investing, including a deep dive into real estate mezzanine finance investing, uncorrelated assets for downside protection, citizenship by investment, second passports, territorial tax systems and his global view of markets today.

Tiho is a Global Citizen & Investor, and today runs the multifamily office, The Atlas Investor on behalf of his family and other ultra high net worth families and individuals.

I've been fortunate to build a friendship with Tiho since connecting last year and always enjoy our multi-hour conversations about the state of the world, investment opportunities and challenging each other to see things from different perspectives. Tiho has a mind like no other person I've met and it's a privilege to listen and learn to him whenever I'm given the opportunity.

To hear Tiho's first appearance on the podcast, please visit: Tiho Brkan – Global Deal Flow for Family Office Investors.

Standout Quotes:

"Is Cash going to be King or is cash going to be trash?" - [Tiho]
"While it's easy to make money today and everything seems to be working, the question for very smart investors is to anticipate what's around the corner" - [Tiho]
"If you think about a Real Estate cycle, you have 4 stages; Early-stage, mid-cycle, late-stage, and downturn... in Early-stage, you want to be in equity as much as possible" - [Tiho]
"We don't do deals with any developer that doesn't have more than one exit strategy" - [Tiho]
"If a senior lender is doing 37 million, talk to them, ask them about the due diligence because they're putting far more money than you are and they've done it all" - [Tiho]
"The way that you diversify your portfolio, you can also diversify your life" - [Tiho]
"Stick around very experienced people who have been around for a long time, who have survived the cycles... Stick with a talented group of people who have a low personnel turnover" - [Tiho]
"Negotiate... Negotiate... Negotiate" - [Tiho]

Key Takeaways:

Mike's previous episode with Tiho Brkan is one of the most downloaded episodes, and by popular demand, he had to bring him for a 2nd episode.
Tiho shares that a lot of investors in this period want to make a lot of money as quickly as possible, as this time is not very suitable for long-term investment.
He explains the reasons why this recession has been the worst in a long time, but this does not reflect in some assets and certain locations.
In normal valuation, reprisals happen where you hold cash which gives you optionality and the ability to be selective, but where money supply around the world is increasing at a rapid speed, is cash going to be King or is cash going to be trash?
Tiho explains that as a contrarian investor, you ride a certain wave until valuations become extreme for you, understanding that high valuations today entail future disappointing returns and so rather, you go and look for relative value elsewhere.
Family offices don't have to be restricted to one type of asset, they have an 'Open Mandate' and Tiho describes the various opportunities available for family offices. Most investors are asking, 'how much money can I make by next Monday?' while he is asking 'How do we only lose 20% rather than 50% in the upcoming downturn?'
The capital stack' and 'Mezzanine debt': There are 3 Real Estate strategies which are Core Real Estate, Value add Real Estate or Opportunistic Real Estate. Mezzanine debt is most commonly a strategy seen in opportunistic Real Estate investment. Mezzanine debt exposure is the most versatile in all 4 stages of the Real-estate cycle(early, mid, late, and downturn). With Mezzanine debt, you can get up to 15% returns per annum.
Tiho's due diligence process before investing: First, the deal must be 'shovel ready' meaning construction starts immediately. Next, note the purpose or theme and planning of the project, location of the project, the track record of the borrower, feasibility studies, the general contractor or quantity surveyor, Securities, and the Exit Strategy.
What is the Monitoring process? This involves Weekly and fortnightly communication to get updates on the project. it may also involve site visits by you or a Real Estate expert, and construction status updates.
Discussing Residence Planning perspective: What is the purpose that we're trying to accomplish here?
The OECD tax model: This is divided into 4 segments of how income is taxed. First is the "No Income Tax", second is "Territorial Tax". "Residence-based Taxation" is third. Last is "Citizenship Based Taxation".
An important investing lesson: Stick around very experienced people who have been around for a long time, who have survived the cycles. Stick with a talented group of people who have a low personnel turnover.
Everything is negotiable in the world of finance.

Episode Timeline:

[00:50] Introducing 2nd-time guest "Tiho Brkan", by popular demand.
[02:30] From your perspective, what have you seen evolve over the last few months from this pandemic?
[09:03] Are Contrarian investors nowadays taking advantage of the increased supply of money or sitting on their hands?
[13:52] Discussing the impact of the increase in money supply on preferences regarding the duration of family investments.
[22:38] 'The Capital Stack' and 'Mezzanine debt' in Real Estate projects.
[35:03] Tiho describes in critical detail, his due diligence process before investing in a deal.
[46:00] The 'Monitoring Process'
[52:50] Are there advantages to the double taxation agreement in a cross-border environment that investors should be thinking about?
[57:26] The OECD tax model
[01:05:10] An investing lesson to his kids

For more episodes go to
BusinessOfFamily.net

Follow Mike on Twitter @MikeBoyd

If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes, I receive a notification of each review. Thank you!

Special Guest: Tiho Brkan.

Spencer Burke - The St Louis Trust Company Multi-Family Office [The Business of Family]

Mike Boyd — Mon, 12 Oct 2020 19:00:00 +1000

Spencer is a Principal with The St. Louis Trust Company, a multi-family office for 50 families in the United States managing in excess of US $10 billion, where he heads the Family Business Advisory Practice. Spencer is also an Adjunct Lecturer in Family Business at the Olin Business School at Washington University in St. Louis.

Standout Quotes:

“Multi-family businesses are acts of inadvertence in the initial years or the initial generation, they're usually a force of necessity, and then it becomes more opportunistic as the family gets bigger, and by the time you get to the 3rd generation it's more process-driven and ultimately becomes strategic” – Spencer Burke
“At the end of the day, it's not about having a board and all that, it's about the quality of the people, the vision, the culture and purpose of the organization; that's what creates great companies of all kinds and family business is just a large subset of great companies in the world” – Spencer Burke
"In the United States, you can own 100% of the votes and not own any of the economics of a company" – Spencer Burke
"I don't think there's anything better to own than your own company and the ability to compound earnings" – Spencer Burke
“When it is time to sell the business that's great, that's not a failure” – Spencer Burke
“The key to happiness is, don't let other people be the measure of your success; If you're not happy doing what you're doing, go do something else” – Spencer Burke

Key Takeaways:

Some families walk away from a wealth of knowledge because they don't know what they're getting; although they need the advice, they just have the wrong person giving it to them
Multi-generational family businesses are acts of inadvertence in the initial years or the initial generation, but get more opportunistic as the family gets bigger, and by the third generation, ultimately becomes strategic and process-driven.
“Hygiene" refers to some cost-free measures that can be set up in the beginning to increase your chances of getting beyond the 2nd and 3rd generation, however, if not taken care of, you have no chance of success
The key characteristic shared by enduring companies whether family business or not is "Total Control by One Person”
In most families where there are issues, how the socio-emotional wealth is getting shared is just as prominent as how the money is being shared.
To succeed over long periods (100 years), successful families have extracted a great deal of wealth out of the business so they have the resources to protect the business when necessary.
The 3 fundamental factors that may impede the success of a family business; the Family tree is the first because it tends to grow faster than most business
One of the number 1 keys to family business success is "Set the policies for the future when there are no names attached to them".
The matriarch of the family is usually the keeper of family harmony, the patriarch of the family is usually the keeper of running the great business, but the patriarch more often than not, does not have the power in that family.
The three interest groups represented in a family business; the people in the business, the people that own the business, and the people that are just in the family neither as owners nor in the business.
The key to happiness is ‘don't let other people be the measure of your success; If you're not happy doing what you're doing, go do something else’

Episode Timeline:

[01:28] A concise overview of Spencer's professional background
[07:55] Spencer's thesis on starting a multi-generational family business
[10:50] Instead of a Family Business Course, Spencer calls his course Ownership Insights
[11:36] Common characteristics shared by enduring companies whether family business or not
[14:19] The concept of Spoils of Ownership
[16:35] The 'tyranny of the internal rate of return' versus 'creation of real wealth'
[20:41] The 3-circle diagram in family business education depicts Family, Business, and Ownership, with how they interact.
[22:32] The 3 fundamental undertows that affect a family business
[28:57] The continuum of behaviors; a Business Family and a Family business.
[35:20] The tradeoff between running a great business and maintaining family harmony
[38:00] How is family harmony maintained as businesses progress through multiple generations?
[53:40] A letter from Spencer to his kids.

For more episodes go to
BusinessOfFamily.net

Follow Mike on Twitter @MikeBoyd

If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes, I receive a notification of each review. Thank you!

Special Guest: Spencer Burke.

Tiho Brkan – Global Deal Flow for Family Office Investors [The Business of Family]

Mike Boyd — Mon, 10 Aug 2020 19:00:00 +1000

Our guest this week is Tiho Brkan, a successful trader, portfolio manager and investor, Tiho today runs the multifamily office, The Atlas Investor on behalf of his family and other high net worth families and individuals.

Tiho is known to visit up to 20 countries per year, all the while observing global economic trends, purchasing offshore real estate and executing investments on behalf of his clients.

Standout Quotes:

“The margins in luxury real estate can be insanely profitable as long as you know what you’re doing and as long as you choose the right deal.” - Tiho Brkan [21:27]
“Asian millennials are now becoming the most important demographic for the whole global economy.” - Tiho Brkan [35:30]
“The beautiful thing about mezzanine debt is that it has equity-like returns and bond-like downside protection or margin of safety, and that’s why we like it. ”- Tiho Brkan [42:05]
“Focus on learning from the right source and really moving the needle on what’s important and what counts.” - Tiho Brkan [1:03:55]

Key Takeaways:

How to master the blend between an entrepreneur and an investor
Learning world cultures through travel
The importance of diversifying your capital into alternative assets as a high net worth individual or family office
Understanding the global tax scene when investing across the world
Capital Stack and the difference between senior and mezzanine debt

Episode Timeline:
[1:35] Tiho shares his background both personally and professionally
[4:05] He shares the reason why he travels and how it has changed the way he views the world
[9:02] How Atlas Investor helps investors gain access to extremely attractive private deals plus using the mastermind model with their investors
[13:50] He talks about his clientele and how COVID-19 has affected the investing world
[16:18] The five strategies they use when investing in real estate across the globe
[24:15] The experience of buying and selling luxury real estate
[27:44] He explains how he handles tax when he lives and conducts business globally
[35:12] The macro view, why the Asian millennial will play a big role in the future global economy
[38:37] The advantages of real estate mezzanine debt investment and why real estate investors prefer it over senior debt
[46:49] Tiho explains what they look for when investing in real estate developments
[54:27] How mentors that included his father played a huge part in his success
[1:00:33] He explains the involvement of his family in the business and the importance of learning from the right sources as a younger person

For more episodes go to BusinessOfFamily.net

Follow Mike on Twitter @MikeBoyd

If you feel it's appropriate, I'd so appreciate you taking 30 seconds to Leave a Review on iTunes, I receive a notification of each review. Thank you!

Special Guest: Tiho Brkan.