Allocation and arbitrage of a family office property portfolio in Morocco

Arbitrage is comparison. Comparison between values built on different bases, at different dates, by different hands, is not comparison at all.

1. The allocation decision: hold, sell, redeploy

A property portfolio is not a fixed collection. For a family office or an institutional investor it is a living set that the governance moves in line with its objectives: preservation of capital, income, liquidity, succession, exposure by asset type or by city. At every review cycle the same three decisions come round for each line:

• Hold — the asset performs its role in the strategy, whether through income, location or potential, and its value justifies keeping capital tied up in it.
• Sell — the asset has matured, is underperforming, carries a risk of obsolescence, vacancy or market, or would simply be better realised through rotation.
• Redeploy — the proceeds of a sale, or capital already available, are moved towards an asset type, an area or a risk profile better aligned with the strategy.

These decisions are taken in committee, on a file. And the common denominator of every arbitrage file is value: the value of each asset held, the value of a redeployment target, the consolidated value of the portfolio. That is also where the difficulty begins, because most portfolios carry several generations of figures at once.

2. Why an up-to-date valuation changes the decision

The classic trap is to arbitrate on values that no longer describe anything: an acquisition price several years old, a historic book value, an undocumented agency estimate. But arbitrage rests on comparison — comparing what an asset earns with what it is worth, comparing one line with another, comparing the status quo with a redeployment. If the values compared are not homogeneous — same basis, same date, same method — the comparison is distorted, and the decision with it. Worse, the distortion is invisible: nothing in a spreadsheet signals that two of its rows were built on incompatible foundations.

An independent and recent valuation corrects that. It takes account of the actual condition of the property, its tenancy position, the market as it stands and the relevant comparables, on an explicit method. It lets the governance read the portfolio the way an asset manager would: return by line, contribution of each asset to total value, concentration of risk. The exercise is the institutional counterpart of what a multi-property family estate requires, scaled up and formalised.

3. Frequency: what the framework imposes, what prudence dictates

« How often should we revalue ? » has no single answer — it depends on the vehicle and its framework.

• OPCI — the assets are valued by an independent expert at a regular frequency set by AMMC regulation. Fair value measurement and the involvement of an external valuer sit at the heart of the regime, as set out in our note on valuing OPCI assets at fair value.
• Family offices and unregulated property companies — the frequency is a matter of investment policy and of what the auditors expect. Many settle on a valuation at least annually, supplemented by an update before any significant arbitrage decision.

The prudential principle is blunt: one does not decide to sell or to hold an asset on a stale value. Before an allocation committee, the asset under consideration — and, ideally, the whole portfolio for the sake of coherence — deserves a fresh and comparable figure. Where a full campaign is not proportionate, the honest alternative is to say so and to mark the older lines as such, rather than to present a mixture of dates as though it were a single snapshot.

4. The valuer's role — and where it stops

Two functions are regularly conflated in private wealth structures, and the distinction matters. The independent valuer supplies the value; the governance — investment committee, family council, manager — decides the allocation. The valuer does not arbitrate, and it is precisely that boundary which gives the value its weight.

• What the valuer does: establish a market value, dated and traceable, with the assumptions that underpin it — basis of value, method, vacancy assumptions, condition of the property, comparables and their treatment, sensitivity analysis.
• What the valuer does not do: decide to sell, to hold or to redeploy. That choice belongs to the governance, which weighs the value against its strategy, its liquidity and its own constraints.

This independence is not a matter of form. A value produced by a RICS-certified third party, signed and documented and verifiable line by line, is not the figure wished for by a manager in a hurry to sell or to keep: it is the one a qualified professional defends against recognised standards, and which an auditor can test step by step. For a decision that commits family capital or the interests of a fund's investors, that neutrality is the condition of the quality of the decision itself.

5. Homogeneity of the portfolio: one basis, one date, one method

To arbitrate is to compare, and comparison means something only if the values are produced within a common frame. The requirement is the same as for a purchase in one lot, described in our note on the block valuation of a portfolio for a fund. In practice a portfolio instruction is framed around:

• a common basis of value for every asset — most often market value in the sense of the RICS / IVS standards, whose definition is set out in our guide to the RICS Red Book bases of value;
• a single valuation date, so that all lines are comparable at the same instant;
• harmonised assumptions from one asset to the next on vacancy and holding horizon, even where the method adapts to the nature of each property;
• an individual report per asset and a portfolio summary, traceable back to the assumption for the committee and for the auditors alike.

6. Consistency with fair value under IFRS 13 and with reporting

The arbitrages of an institutional portfolio are not taken in a vacuum: they sit inside a reporting cycle and a consolidation. IFRS 13 defines fair value and imposes a three-level hierarchy of inputs — Level 1 for quoted prices in active markets, Level 2 for observable inputs other than quoted prices, Level 3 for unobservable inputs. Real estate most often falls into Level 3, which puts method and the traceability of assumptions at the centre of the exercise, a point developed in our article on IFRS 13 applied to real estate in Morocco.

A valuation report compliant with the RICS Red Book and IVS supplies exactly what fair value needs in order to be supported: an identified basis of value, an explicit method, documented assumptions. That is what allows an arbitrage value to be examined by head office and by the auditors without methodological rework — the report is readable and verifiable by them, though it does not bind them, and the accounting conclusion remains theirs. What matters practically is that the same piece of work serves two ends at once: deciding the allocation and documenting the value carried in the accounts.

7. In practice: from the portfolio to the decision

• Step 1 — Frame the instruction. An engagement letter defining the perimeter, the basis of value, the valuation date and the common assumptions.
• Step 2 — Value each asset on the method suited to its nature, within the shared methodological frame, by a RICS-certified expert.
• Step 3 — Consolidate into a portfolio summary: value by line, contribution to total value, a reading of returns and of concentration.
• Step 4 — Decide in committee: the governance weighs the values against its strategy and settles hold, sell or redeploy.
• Step 5 — Document the decision and the fair value adopted in the reporting, on the traceable basis of the report.

The logic holds as much for an investor from the region as for one already established in Morocco; our note on Gulf family offices investing in Moroccan real estate takes the same reading grid from the entry side. Where the portfolio is revalued on a settled rhythm rather than only before a committee, the discipline described in our note on periodic portfolio valuation and NAV reporting applies in full.

8. Framing the instruction

A portfolio instruction is settled in an engagement letter: common basis of value, single valuation date, harmonised assumptions, an individual report per asset and a portfolio summary. Delivery is generally 5 to 8 days per asset, with an express route in 48 to 72 hours for priority instructions, and a firm quote issued within 24 hours. Fees start at 3,500 MAD excl. tax per asset, with a volume taper across a portfolio.

Our reports are prepared by RICS-certified experts and comply with Red Book standards. ReaConsult has been advising family offices, property companies and management companies since 2019, with more than 5,000 valuations completed, offices in 6 cities and a rating of 4.9/5 across 47 reviews.

Note: this article describes a method of portfolio valuation and arbitrage. The valuation frequency applying to OPCI assets is governed by AMMC regulation in force; the accounting treatment of fair value follows IFRS 13. Confirm the arrangements applicable to your vehicle with your management company, your auditors or your advisers. No rate, yield or market statistic is advanced here: every value is specific to the property and dated in the report. To instruct us, see our contact page or the property blog.