Authored by: Derek J. Taylor
For high net worth investors, portfolio construction extends well beyond traditional public markets. While public equities and fixed income remain foundational, they are increasingly insufficient on their own to address the complexity of modern wealth objectives—capital preservation, long-term growth, income generation, and downside resilience across market cycles.
At Granite Harbor, we believe that thoughtful allocation to private market investments—specifically commercial real estate and stable, growing operating companies accessed through direct investments, co-GP structures, or co-investments—can meaningfully enhance portfolio outcomes when implemented with discipline and institutional rigor.
The Structural Case for Private Markets
Private markets offer attributes that are difficult to replicate in public securities:
- Reduced correlation to public markets, particularly over full economic cycles
- Access to inefficiencies, where active ownership and operational insight can create value
- Enhanced control over risk and return drivers, especially at the deal level
- Potential for tax efficiency, depending on structure and jurisdiction
For high net worth investors with longer time horizons and the ability to accept reduced liquidity on a portion of their capital, private investments can serve as a powerful complement to traditional allocations.
Commercial Real Estate: Durable Income and Inflation Sensitivity
Institutional-quality commercial real estate remains a cornerstone of private market allocation strategies. When approached selectively, it offers several compelling advantages:
- Contractual cash flows through leases that can support consistent income
- Inflation-hedging characteristics, particularly in assets with rent escalation provisions
- Capital appreciation potential driven by operational improvements, redevelopment, or favorable market dynamics
- Downside protection through tangible underlying assets
Direct or co-GP real estate investments allow investors to focus on specific property types (like industrial/logistics-based or multifamily), geographies (Central U.S.), and strategic business plans (such as a focus on missing middle housing or stable, value-add industrial asset classes) rather than broad, pooled exposure. This precision enables alignment with individual risk tolerance, income needs, and tax considerations.
Operating Companies: Participating in Real Economic Growth
Private investments in stable and growing operating companies provide access to the engine of real economic value creation. These businesses—often underserved by public capital markets—can offer:
- Predictable cash flow generation supported by established customer bases
- Growth through operational enhancements, strategic acquisitions, or market expansion
- Alignment of incentives, particularly in co-investment and co-GP structures
- Downside mitigation through conservative capital structures and active governance
Unlike public equities, where investors are price takers, private operating company investments allow for direct influence over strategic decisions, capital allocation, and long-term value creation.
The Strategic Advantage of Direct, Co-GP, and Co-Investment Structures
How investors access private markets matters as much as the asset class itself. Direct investments, co-GP partnerships, and co-investments offer structural benefits that resonate with sophisticated investors:
- Greater transparency into underlying assets and operations
- Improved fee efficiency relative to blind-pool private funds
- Enhanced governance and reporting access, as well as advisory board opportunities to further influence the investment
- Customization around risk, duration, and capital deployment pacing
These structures are particularly attractive to investors who value partnership, insight, and alignment over scale for its own sake.
Portfolio Construction: Allocation, Not Replacement
Private market investments are not a replacement for public markets—they are an allocation decision. For many high net worth investors, dedicating a measured percentage of investable assets (i.e., 35% of an overall portfolio) to private real estate and operating companies can:
- Reduce overall portfolio volatility
- Improve risk-adjusted return potential
- Diversify sources of income and growth
- Increase resilience across economic environments
The appropriate allocation depends on liquidity needs, tax considerations, time horizon, and overall financial objectives—factors that require careful analysis and ongoing oversight.
A Disciplined, Fiduciary Approach
Private investments demand more than capital; they require experience, selectivity, and rigorous due diligence. At Granite Harbor, our role is to help investors navigate these opportunities with a fiduciary mindset—prioritizing risk management, alignment, and long-term outcomes over short-term trends. This is why we’ve launched Granite Harbor Capital as an additional business vertical and the Mariner Fund I to source and offer to qualified investors real estate and private equity investment opportunities fitting the Granite Harbor criteria and investment thesis.
When executed thoughtfully, private market investments can serve as a powerful tool for high net worth investors seeking to build durable, diversified portfolios that are positioned not just for markets as they are, but for markets as they evolve.
Learn More About Private Market Investing with Granite Harbor Capital
For investors and advisors seeking additional information on private market investment structures, sourcing approaches, and portfolio considerations, Granite Harbor Capital provides educational resources and access to conversations with its private markets team. To learn more, please contact [email protected] or visit graniteharbor.com/mariner-capital-fund to request information and explore available materials related to our newest opportunity fund. Access to investment opportunities is limited to qualified investors and subject to applicable eligibility requirements and disclosures.
This material is provided for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Any such offer or solicitation will be made only to qualified investors by means of a private placement memorandum and other offering documents, which should be read in their entirety. Private investments are highly speculative, illiquid, may involve a complete loss of capital, and are not suitable for all investors. Past performance is not indicative of future results. Prospective investors should conduct their own due diligence and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help them to understand and assess the risks associated with any investment opportunity. Private investment services offered through Granite Harbor Capital, LLC, an Exempt Reporting Adviser. Mariner Capital Opportunity Fund, LP is not and will not be registered under the U.S. Investment Company Act of 1940 or the Securities Act of 1933.