Thoughts on Michael Shvo/Shvo his firm?
Hey guys, curious what your thoughts are on Michael Shvo/Shvo his company? Their recent purchases are clearly all over the news and he seems to be developing a project in Miami as well.
From discussions and reading I've heard he's not really a developer and more of a salesman (based on his past in brokerage) that's overpaying for these buildings. Is it just me or isn't he a legitimate developer with a great firm? Also read the recent news on his partnership on some of his high profile buys, obviously not the best look, but what do you think about working there and how does that experience reflect on the industry? Do you think it's good experience or could it turn you off from other shops? (I'm a somewhat recent grad 2ish years out)
I think Michael Shvo is fucking awesome, fuck anyone who looks down their nose at him. Acquisitions is harder than development, give him a fucking break
Acquisitions is harder than development? Development doesn’t happen without an acquisition...oh yeah, and then 100,000 other things over a 3-5 year period. But sure, acquisitions is harder.
Anyway, lots of “developers” - the guys with the money who start the company - are just salesmen who don’t know shit about finance or the nitty gritty of building a building. He’s one of those. There aren’t huge barriers to entry to try to build a building, and if you’re a good salesman you can do ok. Probably the people under him at the firm know a lot more than he does, he just happens to be the guy at the top who’s paying for it. Doesn’t make him a developer. Bottom line, the firm is...middling.
Doesn't he learn as he goes though so by now he should be knowledgeable? And what's stopping the guy's who know more from going out on their own? Also, why is the firm middling?
Middling in that at the end of the day he is a medium sized shop. Countless others put out more money but Shvo's reputation is more well known because he buys these very very well known properties.
But really the only thing I know thats not printed is that he has on and off been looking to fill a personal assistant position on SelectLeaders for years. Pops up all the time.
Yes I think acquisitions is harder than development... To quote you:
"There aren’t huge barriers to entry to try to build a building, and if you’re a good salesman you can do ok."
developer here btw, for the butthurt 23-yr old dev analysts throwing monkey shit
This is insane. Even seasoned developers are having trouble getting construction financing. I'd argue the exact reverse of what you posit is true - anyone who can sell a lender on why rents/terminal values will increase can buy a building. It's a paper process. Constructing a building requires a LOT more than that. The amount of effort that goes into an acquisition, like the entire process, is only the first and easiest step in development.
He bought the Transamerica Building and a bunch of stuff in Miami & NYC, pretty much a big baller who's putting his dick on the table.
If he's a salesman, who cares? Aren't most syndicators or fundraisers selling their investment opportunity? I respect the fact that he's been able to raise funds to buy projects of that caliber.
I heard he cut out his long time business partner though, so maybe his ethics are f'd up.
Transamerica is for sale at the moment.
He’s been in the news for paying record prices for buildings. Not exactly a shrewd investor.
I’ve seen him getting driven around a couple times down 5th Ave.
Any idea where he gets capital from?
His capital partners on most of his recent deals are BVK (Germany pension fund, so cheap $) and Deutsche Finance America. Not sure what exactly DFA does, but they also partnered with Shvo and some Turkish money - Bilgili Holdings on developments in Miami and LA.
I mean, "developer" is a stretch. I don't think he builds much? He's an acquisitions guy, and nothing wrong with that. His problem is not that he's a salesman, it's that he often seems like a guy who is fronting for money that wants trophy assets and doesn't much care what the returns are. Dumb money. I have no inside info on this but I've met guys like him, who may be buying $500mm buildings every couple years but end up making a relatively modest amount of money because they aren't doing anything, they're just the front man for the transaction. Certainly, I rarely see a deal he buys where I think he's bought at anything other than the absolute height of the market.
It's also worth noting, and this is a more generic point, that the fact that he's in the news is not particularly well correlated to his ability, his profitability, the size of the firm, or anything like that. Often it's the opposite; the folks who get their name in the paper are the ones calling up reporters for the coverage. The heaviest hitters are almost always publicity-shy, which is worth thinking about when reading industry rags like CO or the the Real Deal. Inviting coverage or talking about investment strategy just invites competition; anyone talking about what they're doing and why probably doesn't have a market edge other than cheap equity... or they're just playing dice with the market and banking on rising asset values.
He's built in the past, look at his deals around 2007-2010, has a few projects then and now. Was really just curious how it would be working there? Seems he's more acquisitions focused on trophy properties, so this may not be the path I want if I want to be a developer. I definitely agree, the developers who are media shy usually are the ones doing well and some huge generational families you barely hear of in the news ever.
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