Real Angle: Building Success in Commercial Real Estate

In this episode, Josh discusses medical office investing with Joseph Caltabiano, founder and CEO of Healing Realty Trust. HRT is a REIT that acquires medical office buildings and adds psychedelic-assisted therapy clinics as vacancies arise. Remote work has not disrupted medical office buildings and continues performing well. The REIT structure provides transparency and aligns the interests of the operating side and investors. The value-added strategy involves expanding the infrastructure for psychedelic-assisted therapy, which is a growing and evolving field. The company targets properties in suburban areas near hospitals and focuses on stable revenue streams from long-term therapy. Their long-term goal is to scale up and eventually create a public opportunity. Keywords Healing Realty Trust, REIT, medical office buildings, psychedelic-assisted therapy, value-add strategy, suburban areas, stable revenue streams, scale up, public opportunity Chapters 00:00 Introduction and Overview 05:09 The Benefits of the REIT Structure 07:24 The Potential of Psychedelic-Assisted Therapy 13:12 Targeting Suburban Areas for Stable Revenue 19:45 Scaling Up and Creating a Public Opportunity 23:13 The Disrupted Cap Rates of Medical Office Buildings 26:31 The Bipartisan Acceptance of Mental Health

Roger Krulak, founder and president of Fullstack Modular, discusses modular construction and its benefits. Fullstack Modular is a fully volumetric design manufacturer system for mid to high-rise buildings. They have built the tallest modular building in the world, hotels, affordable housing, and student housing. They have factories in Connecticut and Portland, allowing them to serve both the East Coast and West Coast. Modular construction offers faster construction, less neighborhood disruption, and cost savings through economies of scale. Fullstack Modular aims to be part of the development team and drive the product through the factory to level out the volatility of the development cycle. Keywords modular construction, Fullstack Modular, volumetric design, mid-rise buildings, high-rise buildings, tallest modular building, hotels, affordable housing, student housing, factories, East Coast, West Coast, faster construction, cost savings, economies of scale, development team, volatility Chapters 00:00 Introduction to Fullstack Modular 03:48 Benefits of Modular Construction 06:34 Industrialization in Construction 10:49 Becoming Part of the Development Team 13:08 Modular Construction in the Market 18:13 Adoption of Offsite Construction 21:22 Collaboration with Building Trades 24:02 Limitations of Modular Construction 25:12 Applications of Modular Construction

In this conversation, Joshua Kahr speaks with Sam Hales of SG Communities about mobile home parks and manufactured communities. They discuss the reasons why Sam got into mobile home parks, the challenges of finding product, the lack of new park development, and the perception problem associated with mobile home parks. They also touch on the financing and investor relations aspects of the business. Sam mentions that they are currently considering the future direction of Saratoga Group, whether to continue with syndication or explore other options. Sam Hales, CEO of Saratoga Group, discusses the mobile home park industry and the growth of his organization. He shares his focus on providing stability for residents and employees and building a career path for his team. Sam talks about the challenges of running a family business and the importance of having consistent rules for all employees. He also shares a surprising anecdote about a manager burning down a clubhouse on the morning of a closing. The conversation ends with a discussion about the current market and the increase in activity in the real estate industry. Keywords mobile home parks, manufactured communities, product availability, new development, perception problem, financing, investor relations, syndication, mobile home parks, growth, stability, career path, family business, rules, surprising anecdote, market activity Chapters 00:00 Introduction and Setting 02:30 Recession Resistance and Perception Problem 05:11 Zoning and Approvals for New Parks 07:06 Housing Crisis and Perception Problem 09:03 Changing Perception through Upgrades 11:41 Refinancing with Fannie Mae or Freddie Mac 14:11 Considerations for the Future of Saratoga Group 22:48 Surprising Anecdote: Manager Burns Down Clubhouse 31:04 Increased Market Activity in Real Estate

Grant Reaves, Managing Director and Co-Founder of Stoic Equity Partners, discusses the industrial real estate market. Stoic primarily invests in multi-tenant flex industrial properties in the Southeast region of the United States. They focus on secondary markets that offer in-place yield and potential for rent growth. The demand for flex industrial space is high, with a variety of tenants including home services businesses, pharmaceutical companies, general contractors, and more. Stoic follows a value-add strategy, acquiring properties with varying degrees of stabilization and pushing rents to increase returns. They have recently launched a fund to raise equity for their acquisitions. Grant Reaves and Joshua Kahr discuss their experiences in the real estate industry and the growth of their firms. They talk about the importance of remaining humble and working well with partners. Grant shares the story of how he and his partner Jeremy Friedman started working together and their different backgrounds in investment banking and home building. They discuss the evolution of their firm and their plans for future funds. Grant also shares a funny story about discovering people living in one of their self-storage units. They talk about the importance of marketing and building relationships with investors. Keywords industrial real estate, flex industrial, secondary markets, in-place yield, rent growth, value-add strategy, fund, real estate, growth, partnership, investment banking, home building, fund, syndication, marketing, investors Takeaways Stoic Equity Partners invests in multi-tenant flex industrial properties in the Southeast region of the United States. They focus on secondary markets that offer in-place yield and potential for rent growth. Flex industrial properties have a variety of tenants, including home services businesses, pharmaceutical companies, and general contractors. Stoic follows a value-add strategy, acquiring properties with varying degrees of stabilization and pushing rents to increase returns. They have recently launched a fund to raise equity for their acquisitions. Remaining humble and working well with partners is important in the real estate industry. Building relationships with investors and marketing through various channels is crucial for raising funds. The evolution of a firm often involves starting with friends and family, then moving to syndication, working with family offices, and eventually launching a fund. Putting out content and showcasing expertise through blogs, videos, and podcasts can help attract investors. Flexibility and problem-solving skills are valuable assets in the real estate business. The internet has made it easier to raise funds and connect with investors from different locations. Finding the right investors who align with the firm's vision is key to long-term success. Documenting everything on social media can have unintended consequences and impact one's reputation. Selling and convincing are important skills in both brokerage and fund management. Keeping things simple and not overcomplicating deals is crucial in the real estate industry. Chapters 00:00 Introduction and Background 02:10 Investing in Multi-Tenant Flex Industrial Properties 04:59 The Diversity of Tenants in Flex Industrial 10:00 Trends and Outlook for the Industrial Market 12:53 Value-Add Strategy in Industrial Real Estate 14:55 Stoic's Approach to Property Management 20:11 The Evolution from Syndication to Fund Management 23:03 Attracting Investors through Content Marketing and Relationship Building

In this conversation, Josh Kahr speaks with Alex Vitenas about land development. They discuss the process of land development in Texas, including tax foreclosures and auctions. Alex shares his experience in purchasing distressed assets and flipping properties. He also talks about his funding strategies and the importance of finding the right deals. Alex highlights the success he has had with subdividing land and selling the parcels individually. Alexander Vitenas discusses his strategy of utilizing leverage to acquire properties and pay off debt quickly. He shares his approach of accumulating cash and then using leverage to do acquisitions. He also talks about the benefits of delayed gratification and the challenges of analyzing a large number of deals. Vitenas explains his decision to focus on finding the best deals rather than a specific neighborhood and the importance of being able to quickly identify the highest potential opportunities. He also shares a story about a challenging property purchase and the legal issues he faced. Takeaways Land development in Texas involves tax foreclosures and auctions. Purchasing distressed assets can be a profitable strategy. Finding the right deals and focusing on specific areas can lead to success. Subdividing land and selling parcels individually can be a lucrative approach. Utilizing leverage can help accelerate debt repayment and property acquisition. Accumulating cash and then using leverage can be an effective strategy. Delayed gratification can have significant benefits in the long term. Analyzing a large number of deals can be challenging but can lead to finding the best opportunities. Focusing on the best deals rather than a specific neighborhood can result in higher deal flow and better returns. Legal issues can arise in property purchases, and it is important to navigate them effectively. --- Chapters 00:00 Land Development in Texas 11:45 Finding the Right Deals and Focusing on Specific Areas 22:26 The Benefits of Delayed Gratification 29:11 Navigating Legal Issues in Property Purchases

In this conversation, Joshua Kahr and Norman Miller, a professor emeritus at the University of San Diego, discuss various aspects of real estate investment. He explains the evolution of family offices and the challenges of benchmarking in real estate. Miller emphasizes the importance of long-term thinking and net present value in investment decisions. He also highlights the significance of storytelling and track records in the industry. Additionally, Miller discusses the role of risk, branding, and niche segments in real estate investment. He concludes by expressing optimism about the future of the real estate market. Takeaways Real estate investment requires a long-term perspective and a focus on net present value rather than short-term gains. Storytelling and track records play a crucial role in attracting investors and building credibility in the real estate industry. Benchmarking in real estate can be challenging due to the lack of public data and the diversity of property types. Investors should consider the risk-adjusted returns and the financing strategies when evaluating real estate investments. Niche segments, such as data centers and self-storage, offer promising opportunities for real estate investors. --- Chapters 00:00 Introduction and Background 01:27 The Evolution of Family Offices 03:43 Challenges of Benchmarking in Real Estate 05:36 Determining the Right Level of Risk in Real Estate Investing 07:23 Internal Rate of Return (IRR) vs. Net Present Value (NPV) 09:17 The Importance of Storytelling in Real Estate Investment 10:28 The Challenge of Measuring Success in Real Estate 13:18 The Role of Risk in Real Estate Investment 14:17 The Importance of Track Records in Real Estate Investment 19:14 The Value of Branding in Real Estate 21:45 The Future of Private Wealth Managers in Real Estate 23:31 The Importance of Niche Real Estate Segments 26:06 The Role of REITs in Real Estate Investment 31:47 The Future of the Real Estate Market 33:21 Conclusion

Diego Hurtado, Principal at Navio Consulting, discusses fund management and raising funds for small to medium-sized developers. Navio Consulting helps these developers build and set up real estate investment funds, and then assists in managing them. The typical fund structure involves adhering to Regulation D, Rule 506(c), which allows for the marketing of the offering to accredited investors. Diego emphasizes the importance of trust and relationships in the fundraising process, and the need for professionalization in the industry. Takeaways Navio Consulting helps small to medium-sized developers build and manage real estate investment funds. The typical fund structure involves adhering to Regulation D, Rule 506(c), which allows for the marketing of the offering to accredited investors. Trust and relationships are crucial in the fundraising process. Chapters 00:00 Introduction and Overview 00:40 Navio Consulting: Helping Small to Medium-Sized Developers 05:15 Fund Structure and Regulation D 08:49 Fees and Compensation in Fund Management 11:11 Advantages of Building a Fund 15:18 Involvement in the Fund After Launch 18:02 Asset Management and Deal Fees 21:11 Trends in Fundraising and Fund Management 26:48 Long-Term Vision and Interest in Education 31:11 Major Trends in Fundraising and Fund Management 33:31 Importance of Building Relationships 34:01 Conclusion

Summary In this conversation, Joshua Kahr speaks with Eric Doroski, Managing Partner at Zanzibar Capital, about their focus on the Boston market and their investment and development pipeline. They discuss the challenges in the current market, including the lack of debt and equity, and the impact of interest rates. Eric shares insights into their current project, a 32-unit condo development, and the importance of understanding the retail condo market. They also discuss their data-driven approach and how they convey this to their investors. Eric highlights the trend of affordable housing projects and their equity sources, including working with family offices. Takeaways Zanzibar Capital focuses on the Boston market, particularly in the greater Boston area, with a focus on multifamily and mixed-use properties. They are currently working on a 32-unit condo development project in South Boston, which includes ground-floor retail and affordable units. Eric Doroski emphasizes the importance of a data-driven approach and the ability to provide quantitative answers to investors' questions. They discuss the challenges in the current market, including the disconnect between buyers and sellers, and the impact of interest rates. However, there are still opportunities for investment and development. Chapters 00:00 Introduction and Background 01:02 Zanzibar Capital and Focus on Boston Market 03:18 Investment vs. Development Pipeline 04:27 Challenges in the Current Market 05:12 Current Project: 32-Unit Condo Development 07:14 Retail Condos and Specialized Investments 08:06 Focus on Core Competencies 09:08 Cashless Society and Amenities 09:54 EV Charging and Future-Proofing 11:56 Interest Rates and Future Opportunities 13:13 Data-Driven Approach and Investor Communication 15:22 Unique Value Proposition and Gut Feelings 19:49 Trends in the Market: Affordable Housing Projects 23:04 Equity Sources and Working with Family Offices 26:41 Interesting Market Trends and Opportunities --- This podcast is sponsored by Kahr Real Estate Services (https://www.kahrrealestate.com/), a leading provider of in-person and online financial training for the commercial real estate industry. Sign up for our live Excel modeling training class here: https://www.kahrrealestate.com/product/excel-for-real-estate-analysis/ Sign up for our self-paced Case Study course here: https://kahrrealestate.thinkific.com/courses/kahr's-challenge-cases

Chris Pawlik, co-founder of EPR Squared, explains the concept of energy producing retail realty and how the company offers a sale leaseback of energy rights to property owners. By developing energy rights behind the meter, property owners can decrease operating expenses and increase net operating income. The agreements typically last around seven years, and EPR Squared provides a percentage rent to the property owner based on the revenue generated from the power. The company targets projects with a minimum size of 30,000 to 50,000 square feet, but is also developing an energy rights portal to accommodate smaller projects. Takeaways EPR Squared offers a sale leaseback of energy rights to property owners, allowing them to decrease operating expenses and increase net operating income. The agreements typically last around seven years, and property owners receive a percentage rent based on the revenue generated from the power. EPR Squared targets projects with a minimum size of 30,000 to 50,000 square feet, but is developing an energy rights portal to accommodate smaller projects. The real estate market conditions, such as interest rates and leasing activity, can impact the adoption of EPR Squared's services. Chapters 00:00 Introduction and Company Overview 00:49 Explanation of EPR Squared 04:02 Sale Leaseback of Energy Rights 05:54 Revenue Sharing Agreement 08:25 Duration of Agreements 09:57 Impact of Real Estate Market on EPR Squared 14:54 Market Potential and Location 17:03 Comparison to Other Financing Options 20:56 Longevity of Solar Equipment 21:08 Customer Acquisition 23:29 Surprises in the Business 28:52 Impact of Real Estate Market on EPR Squared 32:48 Minimum Size for EPR Squared Projects 34:42 Energy Rights Portal --- This podcast is sponsored by Kahr Real Estate Services (https://www.kahrrealestate.com/), a leading provider of in-person and online financial training for the commercial real estate industry. Sign up for our live Excel modeling training class here: https://www.kahrrealestate.com/product/excel-for-real-estate-analysis/ Sign up for our self-paced Case Study course here: https://kahrrealestate.thinkific.com/courses/kahr's-challenge-cases

Chad Blevens from Repower Holdings discusses their unique approach to financing energy improvement projects in commercial real estate. Repower Holdings aims to provide capital for energy improvement projects that are part of larger real estate deals, offering an equity position in the overall asset. This approach aligns the interests of the energy improvement provider and the real estate investor, driving trust and collaboration. The strategy is applicable to various asset classes and regions, with a focus on high energy use intensity and regions with higher energy costs. Repower Holdings plans to start deploying capital in Q1 and expects to have a balanced portfolio across asset classes and regions. Takeaways Repower Holdings provides capital for energy improvement projects in commercial real estate, offering an equity position in the overall asset. Their unique approach aligns the interests of the energy improvement provider and the real estate investor, driving trust and collaboration. The strategy is applicable to various asset classes and regions, with a focus on high energy use intensity and regions with higher energy costs. Repower Holdings plans to start deploying capital in Q1 and expects to have a balanced portfolio across asset classes and regions. Chapters 00:00 Introduction and Overview 00:57 Repower Holdings' Concept and Objectives 03:23 Equity Position in Real Estate Deals 07:10 Repower Holdings' Differentiation 09:32 Partnership with Correlate Energy 10:29 Expanding Financing Options 11:57 Equity Financing vs. PPA Financing 13:23 Focus on Ground-Up Development and Value-Add Projects 16:00 Case Study: Energy Retrofit of a 1970s Vintage Apartment Complex 20:51 Importance of Energy Efficiency in Real Estate 22:16 Energy Efficiency Challenges and Low-Hanging Fruit 24:35 Alignment of Interests and Trust 26:32 Fundraising and Deployment Timeline 28:20 Target Market and Product Types 30:11 Balanced Portfolio Approach 34:04 Long-Term Viability of the Strategy --- This podcast is sponsored by Kahr Real Estate Services (https://www.kahrrealestate.com/), a leading provider of in-person and online financial training for the commercial real estate industry. Sign up for our live Excel modeling training class here: https://www.kahrrealestate.com/product/excel-for-real-estate-analysis/ Sign up for our self-paced Case Study course here: https://kahrrealestate.thinkific.com/courses/kahr's-challenge-cases

In this interview, Josh Kahr gets to sit down with the whole team at Montgomery Partners and talk about the lifecycle of the asset - from acquisition to fundraising to asset management. They are a long-term value-add investor in the multifamily space. They focus on the B to C class space in markets such as California, Colorado, and Nevada, and are expanding into Utah, Washington, Idaho, and Oregon. The company has a track record of success and a loyal investor base. They are cautiously optimistic about the market in 2024, but are aware of potential challenges such as a recession and increased supply. Montgomery Partners is open to exploring new opportunities, including joint ventures and alternative investment strategies. They are also considering ancillary revenue opportunities such as solar and EV charging. Chapters 00:00 Introduction and Company Overview 03:02 Investment Strategy and Target Markets 08:06 Market Outlook and Potential Challenges 12:12 Operational Challenges and Property Management 15:15 Recent Deals and Surprises 18:06 Market Conditions and Future Plans 25:15 Solar and Electric Vehicles 29:21 Third-Party Property Management 30:30 Cautious Optimism and Future Investments --- This podcast is sponsored by Kahr Real Estate Services (https://www.kahrrealestate.com/), a leading provider of in-person and online financial training for the commercial real estate industry. Sign up for our live Excel modeling training class here: https://www.kahrrealestate.com/product/excel-for-real-estate-analysis/ Sign up for our self-paced Case Study course here: https://kahrrealestate.thinkific.com/courses/kahr's-challenge-cases

In this conversation, Joshua Kahr speaks with Brian Wilson, Managing Director of Real Estate at Bow River Capital (bowrivercapital.com). They discuss Bow River Capital's investment strategy, regional focus on the "Rodeo Region", and how they find quality operators to partner with. They also explore the current market conditions and the timing of capital deployment. Brian also shares insights on finding and evaluating operators, as well as other interesting investment opportunities in retail and single-tenant net leasing. They conclude by discussing the outlook for 2024 and the importance of considering market fundamentals in investment decisions. Is 2024 the year the equity floodgates finally open? Chapters 00:00 Introduction and Background 01:11 Overview of Bow River Capital 03:18 Investment Strategy and Partnerships 05:45 Regional Focus 07:13 Investment Opportunities in Non-Coastal Cities 08:46 Timing of Capital Deployment 11:36 Market Fundamentals and Supply 13:57 Importance of Partner Selection 16:23 Dual Strategy of Apartments and Industrial 20:13 Market Timing and Fund Deployment 23:49 Finding and Evaluating Operators 25:28 Other Interesting Investments 32:43 Investment Opportunities in Retail and Single-Tenant Net Leasing 35:22 Investment Opportunities in Income Funds and Subordinate Debt 38:06 Outlook for 2024 and Conclusion --- This podcast is sponsored by Kahr Real Estate Services (https://www.kahrrealestate.com/), a leading provider of in-person and online financial training for the commercial real estate industry. Sign up for our live Excel modeling training class here: https://www.kahrrealestate.com/product/excel-for-real-estate-analysis/ Sign up for our self-paced Case Study course here: https://kahrrealestate.thinkific.com/courses/kahr's-challenge-cases