Comments (7)

 
Feb 17, 2021 - 7:09pm

Well, let's see. The CEO's bio reads, "Jeffrey has lead every part of the real estate lifecycle..."

So they at the very least employ people who don't know the difference between 'lead' and 'led'. And the CEO probably personally signed off on that.

Long story short, they're fucking idiots. But, they have done decently in real estate. You don't need to be a genius to do well in real estate.

 
Feb 22, 2021 - 1:31pm

Subphive

Bump - Anyone else have something a little more constructive than the guy above who puts merit into a website?

I think that's a pretty constructive comment, actually.  Anyone who can't be bothered to proofread the boilerplate nonsense that goes on their website probably doesn't have the organizational ability or focus on detail to successfully run a real estate business.

 

I am also always skeptical of newer companies (or smaller ones) that claim to be generalists both in scope of asset class and geography.  If you're the size of a Related or a Hines or whatever, then yeah you can make that work.  A 20 person company cannot possibly be executing to a best possible outcomes on industrial buildings in St Louis and office in Houston and multifamily in Florida, all at once.  Pick a lane.  Because otherwise there is always someone who knows more than you do about the market or the asset, and if they're all passing, you are overpaying.

 
Feb 22, 2021 - 3:16pm

I disagree with the generalist comment. I know plenty of successful, small, REPE funds that are experts in 4 or so asset classes. The way you do it is have multiple people on the platform who just focus on 1 or 2 asset classes. Now, are you running around like a chicken with its heads chopped off because you cover the whole country - 100%. Are these firms sweatshops - 100%. But are they successful. Yea, they do just fine. Some deals hit, some miss. But they keep raising capital. 

 
Feb 22, 2021 - 3:59pm

pudding

I disagree with the generalist comment. I know plenty of successful, small, REPE funds that are experts in 4 or so asset classes. The way you do it is have multiple people on the platform who just focus on 1 or 2 asset classes. Now, are you running around like a chicken with its heads chopped off because you cover the whole country - 100%. Are these firms sweatshops - 100%. But are they successful. Yea, they do just fine. Some deals hit, some miss. But they keep raising capital. 

Well you notice how your description of them went from "successful" to "they do just fine" to "they keep raising capital."  Which in my book is a pretty vast gulf.  Just because they keep moving doesn't mean they're doing particularly well - it's been hard to lose money in this business the last ten years.  Are they outperforming their peers?  That's the real question.

I ask this of all my colleagues who want to do something on their own - what do they have that any other person in this industry doesn't?  What is their edge.  Strong local relationships is one.  Unique knowledge in a field is another.  Merely having money isn't enough anymore.  Every time I hear someone (or heard, you don't hear it anymore as much) say they're going to do value add multifamily in the Southeast or in the Sun Belt I snort.  I've said this before, but there are only so many times you can pick over those assets before someone gets caught without a chair when the music stops.  The Arch guys have been in business for 4 years - how can anyone possibly know if they're successful?  Even in an aggressive timeline they've barely had time to execute on and get out of their business strategy, on just the first few deals!  They say they own ~$350mm in real estate, and that's great.  And if they make a 10% return, that is a "success" but it's nothing to write home about when their peers are doing 200-300 bps better.  I just think it's important to differentiate between "they deployed a lot of money" and "they were very successful."  The second proposition relies on the first, but by no means is the reverse true.

 
Feb 22, 2021 - 1:45pm

Subphive

Bump - Anyone else have something a little more constructive than the guy above who puts merit into a website?

Not sure how that's NOT a constructive comment.

People put tons of merit if someone misses a comma in their resume why is too much to ask for a firm to proofread their website? 
 

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