The Problem With High Net Worth Individuals, Family Offices, Endowments & Foundations…And The Solution That Meets All Their Needs

Right now, the economic landscape is testing investors everywhere. Inflation is high, interest rates are rising, and global markets feel unpredictable. Many investors will retreat or freeze, missing out on opportunities others will seize.

For most investors, the ultimate goal is not simply wealth, but what wealth allows us to do. 

1. Financial Sufficiency – Accumulated wealth that comfortably supports current and future lifestyle needs.

2. Financial Stability – A dependable income stream that funds a better quality of life, health, wellness, and freedom.

3. Financial Flexibility – Freedom of time and location—to live, travel, and act with independence.

4. Financial Freedom – Living entirely off passive income, untethered from daily financial obligations.

5. Financial Abundance – Creating lasting wealth that supports a legacy for future generations or philanthropic endeavors.

Money is simply the tool. The real focus is impact, freedom, and legacy.

For High Net Worth Individuals (HNWIs) and Family Offices, that vision is sharper, longer-term, and often multi-generational.  Their focus lies in the preservation of capital first, then the growth of that capital to sustain the needs of up to 4 generations that follow. Less risk, stable returns.

HNWIs: Face Different Objectives, Different Pressures

While the fundamental goals are universal, the complexity of managing generational wealth introduces unique challenges. Some of the top problems facing HNWIs these days are:

• Market Volatility: A desire to insulate portfolios from turbulent public markets. See Top Issues Below - UBS 2025 Global Family Office Report

• Persistent Inflation: Despite moderating CPI, core inflation remains sticky (~2.8% in Q1 2025), challenging fixed-income assets and squeezing returns.

• Subdued Growth: The OECD projects global GDP growth to hover around 3.1% in 2025, limiting traditional capital appreciation avenues.

• Opportunity Amid Disruption: Identifying assets that thrive amid structural economic change.

• Privacy and Control: Finding investments that align with values, reduce outside risk from cyber-hacking or financial fraud.

• Succession Planning: Ensuring current investments are relevant, simple to understand and flexible enough to serve the needs of heirs and future stewards.

Unlike the average investor, the wealthy don’t chase headlines or hot trends. Instead, they gravitate toward resilient, long-duration assets with intrinsic value—especially those capable of delivering stable, tax-efficient income, capital preservation, and risk-adjusted growth.

This is where commercial real estate enters the conversation.

Why Real Estate—Why Now?

Real estate remains a cornerstone of family office portfolios for good reason. It offers:

• Tangible value

• Stable income generation

• Low correlation to equity markets

• Inflation protection

• Favorable tax treatment

According to PwC’s Global Family Office Deals Study 2024, real estate has rebounded as a preferred asset class, representing its highest portfolio share since 2019. At the same time, allocations to public equities are shrinking—down 9 percentage points since 2020.

Per JP Morgan’s 2024 Global Family Office Report, 44% of family offices target a 10%+ return annually. Real estate—especially high-performing niche segments—frequently meets or exceeds this benchmark, often with lower volatility.

According to Tiger 21’s most recent 2025 Asset Allocation Report, Real Estate has accounted for up to 28% of their member’s portfolio. On average, typical allocations have hovered just under the 15% level.

Real estate offers a compelling solution: a less stock market-correlated, income-producing hedge with structural growth characteristics.

Why High Net Worth Investors Are Increasing Exposure to Real Estate

1. Wealth Preservation and Asset Stability

• Hard Asset Advantage: Real estate is tangible and less correlated to market sentiment—HNWIs surveyed by Knight Frank in 2024 reported allocating 24% of total wealth to real estate, second only to equities[¹⁰].

• Lower Volatility: Senior housing shows lower standard deviation of returns compared to equities or even traditional multifamily real estate.

2. Diversification with Income

• Senior living typically provides 5–7% annual cash-on-cash returns, with total IRRs ranging from 10–14% in stabilized assets or value-add strategies[¹¹].

• Rental agreements and healthcare-related services provide diversified revenue streams within a single asset.

3. Favorable Tax Structures

• In Canada, investors benefit from Capital Cost Allowance (CCA) deductions, interest expense deductions, and tax deferral strategies via real estate partnerships or corporations.

• U.S.-based investors (where applicable) also benefit from 1031 exchanges and passive income treatments under REITs or GP/LP structures.

4. Appreciation Potential

• Supply Constraints: High zoning and construction costs (up over 20% in Ontario since 2021) make new development harder—enhancing value of existing, stabilized assets[¹²].

• Professional Management: Properly managed facilities can drive operating margins of 25–35%, making them not only durable but highly efficient[¹³].

5. Inflation Hedge

• As operating costs rise, so do rents. Senior housing operators adjust lease rates annually, aligning income with cost increases and protecting investor purchasing power.

6. Leverage and Capital Efficiency

• HNWIs can acquire premium assets with 50–65% LTV financing, enabling greater returns on equity while using conservative leverage.

• Institutional-quality operators bring scalability and management sophistication to mitigate risks.

7. Intergenerational Planning

• Legacy Assets: Real estate—especially income-producing assets—offers simplicity and utility in estate planning, enabling HNWIs to pass along appreciating, income-yielding portfolios to the next generation.

The Ideal Solution For HNWIs, Family Offices, Endowments & Foundations:

Among Real Estate asset classes, Senior Living Residences are emerging as one of the most resilient and rewarding sectors—offering powerful demographic tailwinds, undersupplied markets, and inflation-protected cash flows.

Senior Living Real Estate: A Demographically Driven Asset Class

Within commercial real estate, few segments combine demographic inevitability, economic resilience, and institutional appeal like Senior Living. It is both needs-based and supply-constrained, making it a rare asset class that is largely insulated from market cycles and has the potential for consistent growth over the next few decades.

Why Senior Living?

1. Demographic Certainty

• Boomer Wave: 9.1 million Canadians are entering retirement age. By 2030, 1 in 4 Canadians will be over 65; by 2046, the 85+ cohort will triple.

• Longevity Trends: Canadians are living longer—averaging 84 years for women and 80 for men—extending the duration of care needs.

• Massive Undersupply: Ontario alone needs over 2,200–2,600 new senior units annually just to maintain current ratios. Supply is not keeping up.

2. Stability and Performance

• High Occupancy: National occupancy in private-pay senior living reached 92.5% in 2024—approaching pre-pandemic levels.

• Resilient Revenue Growth: From 2019 to 2024, average rents in senior living communities have grown at a compound annual rate of 4.8%—Keeping up and often outpacing inflation while providing a reliable income floor. Senior living is unique in that it functions as both a real estate investment and a high-margin operating business. In addition to rental income, properties generate revenue through services such as dining, wellness, and healthcare—all of which are private-pay and not constrained by government pricing regulations. As occupancy increases, a larger share of total returns is driven by operational profitability rather than just rent escalation, offering investors a dual-growth engine: underlying real estate appreciation and rising operational income.

• Recession-Resilient Demand: During the 2008–09 crisis, senior housing occupancy dipped only 1.5–2.5% and quickly rebounded.

3. Attractive Returns and Diversified Income

• Cash Flow: Stabilized properties yield 5–7% cash-on-cash returns.

• Total Return: IRRs of 10–14% are common in value-add and stabilized opportunities.

• Multi-Stream Revenue: Rent, hospitality services, healthcare fees—all from one asset.

4. Favorable Tax and Estate Planning Benefits

• Capital Cost Allowance (CCA) in Canada provides accelerated depreciation.

• Interest deductions, tax deferral strategies, and corporate structures optimize tax treatment.

• Legacy planning: Senior living assets integrate seamlessly into estate plans, offering continuity, income, and simplicity.

5. Operational Leverage & Risk Mitigation

• Scalable Management: Institutional operators drive operational margins of 25–35%.

• Leverage Options: Conservative LTVs (50–65%) enable equity efficiency and enhanced returns.

Senior Living Is A Strategic Fit for Private Capital

Senior Living Isn’t Optional—It’s Inevitable

Few sectors offer the convergence of:

• Structural demand driven by an aging population

• Supply scarcity in high-barrier markets

• Inflation-linked, needs-based revenues

• Long-term stability and legacy alignment

• Tax-efficient, capital-light entry models

…and remain as underexposed in investor portfolios as Senior Living.

Those who recognize the opportunity early—before institutional capital saturates the market—stand to gain disproportionate returns and impact.

To explore current offerings, yield expectations, and partnership opportunities in Senior Living Development or Acquisition, contact Paramount Real Estate Properties Inc., Brokerage.

Mel Giannone

Owner, Broker of Record

Paramount Real Estate Properties Inc., Brokerage

References

[1] OECD Economic Outlook, Interim Report 2025[2] Bank of Canada Monetary Policy Report, Q2 2025[3] REALPAC / MSCI Canada Annual Property Index[4] Statistics Canada, Population Projections 2023–2046[5] Canada Mortgage and Housing Corporation (CMHC) Ontario Housing Supply Report, 2024[6] Health Canada, Canadian Vital Statistics 2023[7] NIC MAP Vision: Canada Senior Housing Trends Q1 2025[8] CBRE Canadian Seniors Housing Report, 2024[9] National Investment Center for Seniors Housing (U.S. data), 2008–2010 performance[10] Knight Frank Wealth Report 2024[11] Preqin Private Capital Real Estate Benchmarks[12] Altus Group Construction Cost Index, Ontario, 2021–2024[13] Colliers Seniors Housing Operations Benchmarking Survey, 2024