Melbourne’s wealthy Smorgon family resets their real estate strategy

afr.com:

One of Australia’s wealthiest families, the Smorgons, have cut back their investments in Australian apartment development and the office market in the United States in a post-pandemic strategic reset.

Peter Edwards, the grandson of Melbourne industrialist Victor Smorgon and chief executive of Victor Smorgon Group – the family office – said the investment fund has shifted its property portfolio towards travel and residential developments in the US instead. The move comes as work from home and rising interest rates eat away at the profitability of certain commercial real estate.

Peter Edwards is the chief executive of the Smorgan Group and Victor Smorgon’s grandson. Nicole Reed

Victor Smorgon, who died in 2009, made his name in steel but expanded Smorgon Consolidated Industries across sectors including property, packaging and paper. When it last appeared on the Financial Review Rich List in 2015, the family’s fortune was estimated to be $2.7 billion.

The family office operates a private fund manager, Victor Smorgon Partners, which has just under $1 billion in funds under management and is open to outside investment.

As US office towers have been offloaded at steep discounts, Mr Edwards said there was a need to re-evaluate their exposure and focus instead on the American residential market. “You work out what you can work out and discard what you need to discard,” he said in an interview with The Australian Financial Review in his Melbourne office.

The family does not have investments in the Australian office market. Mr Edwards said at the height of their exposure to the Australian residential market, they had a pipeline of about 4000 apartments, but high costs and slow sales had discouraged them from further expansion.

“We