Contrarian Acq Shops
Interested in moving to a mid / small sized shop that is less so focused on growing AUM and generating earnings through fees and is more so focused on making true investments with strong conviction. Hoping to join a shop that is willing to take bets and who can see where value lies in the marketplace and transact accordingly. Large shops all seem to move in one direction because they would rather make the same mistake everyone else made and throw their hands up and say “well nobody saw this coming”, rather than make a contrarian investment and risk looking “stupid”. Anybody know of such shops, preferably in the NYC area ?
Bump
Try a family office without outside capital
Most family offices play it pretty safe. They're known for boring investments.
Issue with this is anybody who has been thematically contrarian over the last decade had shitty performance and probably aren’t around any longer. Prime example would be groups who went heavy retail at the same time retail has shit the bed.
Best bet is looking for distressed funds, newly raised funds following a theme, family office, or go work for one of the nut jobs buying office right now.
San Fran office buyers
You are in an ancient Roman business, limited opportunity to be contrarian. You can be optimistic about cap rates or rent growth to make deals work out position yourself strategically in the capital stack! Not rocket surgery however balls of steel. Today, you buy for basis and not for cash flow. If you are a developer, not sure what asset class has upside unless you are in a pref or uniquely structured low cost of capital platform.
Agreed - there are moments in time you can be contrarian in this business, but there's no such thing as a shop that seeks to be contrarian all the time.
This isn't public markets.
Know who some of those buyers are ?
My man just google, the buyers are all over TRD and SF business journal
Weidner made a $250m bet on three properties in downtown/uptown MSP this year. Northland bought a $500m high rise in DTLA this year. Crescent Heights bought a $175m deal in downtown Chicago. All of these in unfavorable markets and purchased at huge discounts to last sale/build cost. Look at those groups with discretionary capital and operate like family offices. Pretty interesting deals getting done today. Would love to push my team out of the sunbelt and start looking at other non-investor friendly markets.
It's been wild watching how low basis is getting in Minneapolis. There's a smaller midrise in a good downtown location (right near Weidner's highrise deal that's under construction) and brokers are praying to hit $200k/door. At least a 30% discount to replacement cost but even at that pricing, it's a sub-4 cap on T12. Current offers are ~15% below the debt balance.
Was surprised Weidner also took down the type 1 deal in Loring Park. Great basis and even bigger discount to replacement cost, but so-so location and operations were a mess.
Similar story going on in Portland rn. Greenleaf just bought two 2020 vintage midrise deals from Fairfield for just north to $200k/door. They now have a newer deal in lease up on the market and one of our client’s is thinking of offering around $180k - $190k.
Absolutely. We own in Portland and it's been a bloodbath from a valuation perspective. Operations are so deal/submarket-specific in that market as well...we have some deals that are missing trended proforma NOI by 10%+, and others that are outperforming by even higher amounts. Really bizarre fundamentals.
I heard a Fairfield exec speak at the Globe St Fall conference last month and his quote was "we will never touch Portland again".
I do have one funny anecdote about one of the deals Green Leaf purchased. It's an ok location and execution, but it sits immediately next door to one of Portland's oldest "men's lifestyle clubs". Includes sauna's, outdoor showers, and "play areas". Windows from the multifamily deal directly overlook the outdoor showers, and when we toured, the PM team said residents complained about literal outdoor orgies in full view of their units. The "Rules" section on their website is pretty, uh, interesting. Literally has a section on "barebacking". More power to them, but we elected to pass on that deal when they were contemplating selling back in 2021.
Holy shit. That's incredible & peak Portland right there. Thanks for sharing lol.
It's a shame someone like Alliance didn't swoop in & rebrand the deal to "Broadstone Bareback"... something that would really connect them to the community.
Northland seems like the real deal. Matty Gott! He’d be the smartest person on WSO. Second place: OZY
I mean, define "contrarian"? Most shops move with the herd because that is where money flows - the question isn't so much "do I believe in XYZ asset class" but "do the people controlling the LP equity believe in it?" If you can't raise equity to do a deal, then all the genius ideas in the world won't get you anywhere. And fund managers and the like tend to be extremely risk averse, because their motivation isn't to do better than everyone else, but not to do worse. If I'm managing your money, it's easy to plow it into industrial and self-storage, because if it fails, it failed for lots of people I don't look so stupid. If I put your money in CBD office buildings and it doesn't pan out, then no one invests with me ever again.
So yeah. Does contrarian mean that you buy what everyone else is bailing out of? Does it mean buying a hot asset class at what is widely considered the peak of the market? So many ways to look at it. It's difficult to be an expert in all things at all times, so naturally you won't see a ton of people who are always buying against the grain, because it simply isn't possible to know enough to take that stance across geographies and asset classes.
The true contrarian groups won’t need to raise money or has fully discretionary capital.
No need to stick to a timeline. No need to survive off of fees. True alignment with LPs.
How can you assert that a truly contrarian group "won't need to raise money" and then praise this hypothetical investor for having "true alignment with LPs".... you know, the very LPs they didn't need to raise money from?
Like a Broadshore, CrossHarbor type of place maybe?
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