The Rise of Partial Exits in Multifamily: Selling Control Without Selling the Asset

Family offices across California are increasingly exploring new ways to unlock capital from their real estate holdings without losing strategic control. In the multifamily sector, a growing trend known as “partial exits” is giving owners the ability to monetize a portion of their assets while maintaining long-term influence, preserving tax advantages, and keeping options open for future growth.

Partial exits offer a flexible approach for family offices that may want liquidity for new investments, debt repayment, or portfolio diversification. Instead of selling an entire property, owners can bring in co-investors, private equity partners, or structured financing arrangements that allow them to sell a minority stake. This approach maintains operational control and ensures the property remains under the strategic vision of the family office, while simultaneously unlocking capital that would otherwise remain tied up.

Retaining Control While Monetizing Value

One of the key advantages of partial exits is the ability to retain control over day-to-day management and long-term strategy. Multifamily properties often require hands-on oversight, from leasing and renovations to capital planning and tenant relations. Family offices that maintain a controlling interest through a partial sale can continue to shape the property’s trajectory, implement value-add initiatives, and preserve the legacy they have built.

For example, a Los Angeles-based family office might partner with a private equity fund to sell a 30 percent stake in a 200-unit apartment complex. The family office retains operational control, oversees major decisions, and continues to benefit from cash flow and appreciation. Meanwhile, the newly injected capital can be redeployed into new acquisitions or used to pay down higher-cost debt, enhancing overall portfolio performance without giving up the asset entirely.

Maximizing Tax Efficiency

Partial exits also offer important tax advantages for family offices. Selling only a portion of an asset can help defer capital gains taxes, particularly when paired with strategies such as 1031 exchanges, charitable remainder trusts, or other estate planning tools. By structuring the transaction carefully, family offices can extract liquidity while maintaining favorable tax treatment, something that full asset sales often compromise.

Moreover, partial exits allow for flexibility in timing. Rather than a single large transaction that may trigger significant tax obligations, owners can stagger sales, aligning them with cash flow needs, market conditions, or strategic objectives. This level of control is especially valuable in California, where multifamily assets in urban centers such as Los Angeles, San Francisco, and San Diego have appreciated substantially over the past decade. Selling entirely at the wrong moment could mean giving up future upside, while partial exits preserve both capital and opportunity.

Preserving Optionality for the Future

Perhaps the most compelling reason family offices are embracing partial exits is the optionality it provides. Retaining a controlling stake allows the family office to participate in future appreciation, refinance opportunities, or operational improvements. Should market conditions change or new strategic priorities emerge, the family office is positioned to pivot without being fully divested.

For instance, in a high-demand market like San Francisco, partial exits allow the family office to share risk with outside partners while remaining actively engaged in property decisions. This approach also opens the door to creative financing structures, such as preferred equity, joint ventures, or profit-sharing arrangements, each of which can align incentives between the family office and new stakeholders.

Strategic Considerations and Expertise

While partial exits offer significant benefits, executing them successfully requires careful planning and expert guidance. Structuring a minority sale involves balancing investor rights with the family office’s operational control, ensuring alignment on distributions, capital calls, and exit provisions. Legal, tax, and financial advisors play a critical role in designing agreements that protect the family office’s interests while providing attractive terms for outside investors.

Additionally, timing and market analysis are essential. Multifamily markets are cyclical, and understanding local dynamics, tenant demand, and rent growth potential is crucial to structuring deals that maximize value. California family offices in particular benefit from partnering with advisors who have deep experience in urban multifamily sectors, where regulatory considerations, property management complexities, and capital markets trends can significantly impact returns.

A Modern Approach to Wealth Management

Partial exits represent a modern evolution in family office real estate strategy. They provide a means to monetize assets without sacrificing influence, maintain tax efficiency, and preserve flexibility for future decisions. For family offices looking to grow their portfolios, enhance liquidity, and strategically manage risk, this approach is increasingly compelling.

In an environment where multifamily assets have both significant cash flow potential and long-term appreciation, partial exits offer a solution that balances immediate needs with future growth. By embracing this strategy, California family offices can strengthen their financial position, continue to influence operations, and maintain the optionality that defines thoughtful wealth management.

For family offices navigating the multifamily market today, partial exits are more than a financial tool. They are a way to align capital, control, and strategy, ensuring that assets continue to work for the family office while providing the flexibility to pursue new opportunities. When executed thoughtfully, partial exits allow families to achieve both liquidity and long-term influence, creating a path to sustainable growth and enduring legacy in the competitive California real estate landscape.