Real Estate Portfolio Structuring for a Family Office

The client came to LFGD with a situation that, from the outside, might have seemed enviable: seven real estate assets spread across Madrid, the Costa Brava and Mallorca. However, the reality was very different. Three of those assets had not generated any return for more than four years, one was leased well below market price under a contract that still had six years to run, and the remaining ones generated an average gross yield of 2.1% per year — well below the opportunity cost.

The tax structure was equally inefficient: the assets were distributed between the owner's personal estate, a limited company and an inherited community of property, which created duplicated tax burdens in some cases and made any sale or refinancing transaction extremely difficult.

The client's objective was clear: he wanted his real estate portfolio to work for him, not the other way around. But he did not know where to start, which assets to keep, which to sell, and how to do it without incurring an exorbitant tax bill.

The first step was a full audit of the seven assets: updated market valuation, analysis of real (not nominal) yield, review of all lease agreements, mortgage charges and urban planning status of each property. This process took six weeks and revealed that two of the assets had significant appreciation potential if repositioned towards the luxury segment.

With that diagnosis in hand, we designed a three-phase strategy. In the first phase, we proceeded with the orderly divestment of the three assets with the worst yield/liquidity ratio, taking advantage of the market moment to maximise the sale price. In the second phase, we repositioned the four remaining assets: two underwent a full renovation aimed at luxury rental, and the other two were incorporated into a professional short-stay premium rental management platform.

In parallel, we worked with the client's legal and tax team to establish a Sociedad de Inversión Libre (SIL) that consolidated all assets under a single structure, eliminating the tax duplication and facilitating centralised management. This structure also opened the door to incorporating external capital in the future without the need to restructure the owner's personal estate.

18 months after the start of the project, the portfolio had gone from generating an average gross yield of 2.1% to 6.8% per year. The two assets repositioned towards luxury rental achieved occupancy rates above 85% in their first year of operation, with an average rent 40% above market comparables.

The divestment of the three suboptimal assets generated liquidity of 40% of the total portfolio value, which the client partially reinvested in two new transactions identified by LFGD with a significantly superior yield profile. The consolidated tax burden was reduced by 34% thanks to the new corporate structure.

Beyond the numbers, the client regained control of his estate. He went from having seven scattered assets requiring his constant attention to having a professionally managed portfolio, with monthly reporting and a clear strategy for the next five years.