We invest primarily across three strategies real estate public equities and what we
call venture and growth Within venture and growth. We focus on two sectors health
care and fintech And I lead the health care strategy for us Manage about 2 .9
billion in a um in invested assets today mostly invest directly into companies Not
so much managers. Great. Thank you Regina should be on Good morning,
or good afternoon. I should say my name is Regina pleasure to be here my second
time to attend this conference I'm from Seattle. I work at CBR a capital markets
doing debt and structure to finance So our team Financed about three billion asset.
I mean three billion for our commercial institutional commercial commercial real estate
investors nationwide in the last few years. So outside CBRE,
I'm also in the process of setting up a family office based in Seattle.
So our future strategy would be, I would say 60 to 70 percent focused on commercial
real estate because that's what I'm very, very familiar with. And the rest of the
allocation would be in venture capital or private equity. House care would be a
focus in AI technologies. - Great, thank you. - We have our investment office in
Greenwich, California, office in Scottsdale, Arizona. And our major operating companies
is in Salinas, California, which is referred to as the salad bowl of the world.
See the hesitation there? You like salad? Yeah. Salad bill of the world 80 % of all
the salad that you eat comes from Salinas, California and We have 13 different
companies under our umbrella at the moment Awesome. Thank you for being here our
firm focuses on enforcing and conducting due diligence on differentiated high -quality
alternative investment managers and GP -led co -invest predominantly to family offices.
Prior to EME, I spent 20 years at a multi -billion -dollar family office as a
director. During my tenure there, I probably allocated to an excess
turn of the investment managers.
My expertise is really a generalist. I've looked at all strategies, but a little bit
more of a focus towards the liquid side-- hedge funds, private credit. I've done a
lot of allocating over my years and look forward to sharing my thoughts. Great.
Thank you. We are a national real estate investment trust specializing in private
credit. We have one strategy. It's simply just real estate, private credit. - Great.
Thank you for being here. So a few of you mentioned an interest in healthcare, or
venture capital, or maybe hedge funds, et cetera. But do a couple of you wanna
share something that's super specific, like some really small niche within healthcare,
or venture capital, or alternatives that maybe someone here in the room is exactly
what you're looking for in that small niche? - Sure, I can get us started.
specifically doing a lot of work right now on all things healthcare and biological
data. So if you have a company that has some access to a net new data set or has
some new way of aggregating, cleaning up, standardizing the messy world of healthcare
data, come talk to me. - Great, thank you. Anyone else wanna add something really
I want to add the focus that we have is on food waste and we're investing in ag
infrastructure and what's that mean. Coast storage facilities and all the supply chain
to make sure that all fresh produce maintains its temperature from field to table.
Great, thank you. So, oh yeah, Regina, you want to add something? Yeah, I can add
a few. So, within the commercial relationship field, our strategy right now is to
focus on the existing assets, multifamily sector, because there are a lot of
opportunities you can buy at this account without doing development.
So, in the healthcare industry, I've been looking at a few companies recently. One
is like retina imaging technology, hence by AI, and also in the food sector,
allergen for baby. So, just a few examples. >> Sure, sure. So,
John, you're really connected in the real estate space where we are with interest
rates and inflation and real estate valuations. Do you lose sleep being in the real
estate space, I know you guys manage over a billion dollars, so just kind of
curious in your perspective. - Yeah, it's a good question, I don't lose sleep, I
make other people lose sleep. And I say that because as a lender, there's a reason
why I'm in private credits, because I don't want to take the risk that equity
players take. And we're in the debt space for a very specific reason. I always want
to be where I'm in control of the entire capital stack. And being in control of
the capital stack, that's what allows me to sleep very peacefully at night. - Right,
right. I have a follow -up question on that. I know you've spent over 30 years
building Fairbridge, backed by Oak Tree Capital. Howard Marx is a billionaire, well
-known investor ahead of Oak Tree. And over three decades, we talk about investment
structures here in the club and going deep on investment structures. And when you
spoke at our mastermind, it struck me that you've spent over three decades, probably
probably thousand plus transactions, negotiating, customizing your own proprietary or
preference for structures, and it's come up a few times at the event. Can you
comment on like the importance of that? 'Cause when I hear Warren Buffett say like,
"Hey, over 50 years, I'm competing against CEOs "in conglomerates, they trade out
every four to 10 years." Like no one else does this for 50 years. And that must
give you like such a sharp edge on structures being an attorney as your background.
Can you comment a little bit on that. Yeah, happy to. Like you said, it's
definitely an evolution of over 30 years. When I first started in the real estate
business, I never in a million years imagined I'd be running a multi -billion dollar
fund. And how did I get there? You know, I started off just doing real estate
deals in the Bronx. And I would not for the first 10 to 15 years, and I kid you
not, I would not do a deal outside of the Bronx. That's what I knew. That's where
I was comfortable. And that was it. And the way I did those deals was I would use
my own capital and then I would participate out the rest of the stack,
so to speak, to get that deal fully funded. So just to keep the numbers easy, if
I was doing a $100 ,000 deal, maybe I'll come up with $20 ,000 and then I would
participate another $80 ,000 to get that deal done. And when I started, that was the
amount of deal flow flow that I was doing was maybe $100 ,000 to $250 ,000 deal. So
to Richard's point, that lasted a good 10 to 15 years until I started growing and
said, all right, maybe I'll do a deal in Brooklyn. And I know a lot of you are
not from New York, but for those of you who are doing a deal from Bronx to
Brooklyn, you may as well be in a different country. I mean, that's how different
values are, court system, borrowers, very different borrow to borrow to borrow, so it
took that amount of time to really figure out how a lot of the borrows work. But
just to get back to the structure, I realized that, all right, participating on each
specific deal, and even if I was using some financial engineering and leveraging on
the back end of a deal, it really wasn't conducive to creating any enterprise value,
to creating any sort of fund structure where I could go out and actually get a
leverage facility across my entire fund, which eventually led me to then go and get
a fund structure. And I did the typical fund structure, set it up as an LLC with
a preff return and the waterfalls and the 80 /20, like all just what you see in a
typical fund structure. Fast forward evolved one more time because we've noticed that
a lot of our investors wanted also because or a debt fund, it wasn't that tax
advantageous. So how do we make it more tax advantageous? So we evolved one more
time where we restructured the fund to become a REIT, real estate investment trust.
And if that wasn't enough, just in the whole basis of evolution, I'm sorry if I'm
going wrong here, but in the basis of evolution, then we also realized that, all
right, even a REIT is not that tax advantageous for all of our offshore foreign
investors. So then we had to go to to Luxembourg and Cayman Islands and start
setting up blockers and feeder funds just to make it more tax advantageous for
everyone. And it literally took 30 years to come up with the proper structure where
we're now a national reed with a Cayman Island blocker fund and it's very tax
advantageous to everyone involved. Awesome. Appreciate you sharing that. Thank you.
Both for Brandt and Dr. Jane, if somebody is trying to approach a billion -dollar
-plus family office, whether it's single family office or multi -family office, and a
lot of people try to do so, what is something you could suggest to them that might
cut the time down in half? Have you really understanding what they're trying to
communicate or really to clearly stand out from all the other stuff coming into your
inbox? How do they get the attention of someone like yourselves that are representing
billion -dollar -plus families? Yeah, I think for us it's actually easier than most
because we're quite public about it. I post pretty actively and I speak at things
and I talk about what themes I'm interested in. So if you've done, let's say, even
an hour of research looking me up, then you kind of know what I'm interested in
and besting in. - Right. - And if you send me something that's completely out of
that wheelhouse, then obviously you haven't done any research, right? So for us, it's
actually easier. A lot of the family offices are not that public about it, so it
might be a little bit more difficult. But I think just a strong first email with a
blurb about exactly what you're doing, I cannot tell you how many times I'm on a
pitch meeting and 45 minutes into the meeting, I still don't know what this company
does.
So that's the dead on arrival, right? So just very clear blurb about exactly what
the company is doing and attach your deck in a PDF, please. Because the more number
of times we have to go back and forth to ask you for preliminary information, just
creates friction, you lose a lot of time, people miss emails, everybody is busy. So
just give them what they need to see to make that initial pass of whether this is
in my wheelhouse and want to take a meeting or not? - Awesome. Yeah, you're so
evolved as a single family office compared to others and getting the deals you
actually want because they're so on your team open to speaking publicly, commenting
publicly on social media, what you're wanting, being clear that you're interested in
healthcare data, healthcare in general, and that's miles beyond most family offices.
They feel like if they do anything public, then people are gonna find out the
family name but they could create a brand around the family office and hire
professionals, and they don't do those things. And some families, I try to tell
them, if you want to get better deal flow, especially in a niche, go out there and
stay focused on that niche. And they'll say, well, we don't only do that niche. I'm
like, yeah, I know that, but you're never gonna see deals first if you don't have
any focus, right? - Yeah, I think this is generally true in life. Most people
operate under the fear of missing out. If I scope it too narrowly, I miss out on
all the other stuff but in my experience life works actually the other way around.
When you set an intention and you are committed to that intention and you're vocal
about that intention you attract people and opportunities that further that intention.
Right yeah for sure awesome and by the way if any questions come up my team can
alert me and we'll bring a microphone over to you. Brandt what about yourself in
your experience you've allocated over different investment managers, some of which
might be here in the room or offering a very similar strategy, so what would you
suggest for getting the attention of billion -dollar plus family offices?
A connection to the person you're reaching out, obviously, is a big one.
You know, LinkedIn would be a great way to see if you share anyone in common and
say, "Hey, I know this person." Usually, if you get a call, you're not gonna pick
up the phone And you probably won't even call them back, just because you just get
so many inflow calls. It's just impossible to keep up.
It's always great to reach out to that family and say, "What do you focus on?" And
they'll say, "Hey, our average ticket's $10 million, and we don't want to be more
than 10 % of a fund, so you've got to be at least $100 million. You've got to
have a three -year track record, and we don't do anything with liquidity worse than
quarterly. So immediately you know what they are and if you can fit.
And then if you do an email, I think, you know, it was already kind of really
nailed, but you just want to do three points. You know, one is what do you do?
Your edge and what makes you different? And then two is your performance. And
that's, I don't want to say everything 'cause, you know, but it's pretty, it's
pretty close. You know, have you performed well and ideally over different markets?
And then the last one would just be your experience. And then you attach your one
pager, you attach your presentation, but very short email straight to the point. And
that's at least going to get a quick read and most likely a response that is your
best probability for a response. >> Awesome. So if anyone missed that, say very
concisely what you do, What is unique about it? What's the edge and what your
performance is? And I'm sure if you could say that in three bullet points or two
sentences to cut to the chase and maybe as Dr. Jane suggested, maybe have a drop
links link or some sort of PDF to be able to open up materials real quick. If
that email is super short, they'll probably be better than 90 % of emails that get
sent to investors, I would guess, based on what you just said. Are you gonna add
anything to that, Brandt, before I move on? No, - Okay, that's perfect. Regina, you
wanna say something? - Yeah, I wanna add a little bit. I found that like one pager
sometimes is helpful. I receive like 49 pages thick, dive very deep into the,
you know, the terminologies, the biological terminologies can be very hard to digest,
but if you can summarize your thing in one page, you know, be concise, what's your,
what's the problem that you're toggling And then what's your solution? What makes
you, what differentiates yourself? And how large is the market? I think that would
be very helpful. - Right, sure, yeah. I know one of our investors took like a 50
page pitch stack and just put in chat GPT and said summarize this thing for me and
like seven bill of points, you know? 'Cause I don't have time to look through this,
you know? - It has become so much easier now with that. And I think if you can't
even do that, then that says a lot. I have a talk on YouTube about how to create
your pitch deck. And I talk about it shouldn't be more than 10 to 15 slides,
so for someone who's working on it, if it's helpful. More intended for companies,
not for funds. >> Awesome. Yeah, we always say 12 to 19 slides, super similar
compared to the average, 44 -page deck you see there. Jim, we haven't heard from you
enough, so you own 13 companies in this area. Can you talk about how maybe the
niche focus or what strategy led to you having successful negotiations to buy those
companies and what led you to be successful in raising the capital needed to acquire
them?
- Yes. Why did I buy them? I'm still trying to answer that question.
A lot of these, a lot of these companies that we looked at are typically fourth
generation family companies. And what we find is in our space,
especially in the ag space and the Salinas, California area, it's all family owned
businesses, right? And what we started to identify is the families,
a lot of them did not forget who took the toy away in the sandbox in the third
grade. So they had a lot of ego. So the company started to take distributions,
take all the money out of the company. So we recognize we could come in,
offer a fair evaluation.
Do the blocking and tackling. I think we all know what we mean by that. Do the
hard work and start it adding value. Start having consistent returns in EBITDA.
Get your management team in place. And then you can go out and start Telling your
story, what problem are you looking to solve, how are you going to solve it, and
don't take all day to tell me how you're going to get there.
So just be straight, be concise,
as I'm not being right at the moment. Be very, very, very straight. So then you've
got to put real accountability in place to hold all of your management team
accountable to the matrix, to the overused word, the KPIs, and you've got to
continue to educate. We are a strong,
strong, strong company in education. 97 % of our employees are Hispanic.
We offer every employee an opportunity, if they do not have a high school education,
we will pay for it. If you want to go to college, we will pay for it.
People are getting very concerned about the overused word AI, and I've been in this
business over 53 years, and my AI was a slide rule, and I thought I was really
high technology, which a HP calculator.
So we have got to remove the fear of the employees. They're gonna live their job
So hopefully that right you have some insight. Thank you. Appreciate that and
originally you talked about acquiring multi -family properties at a discount Is there
any niche area you're focused on like student housing multi -family or workforce or
anything like that? Conventional multi -family so for example, we were raising like
400 million equity for an institutional client based in Seattle. So they already have
three billion assets across the US. So they have been purely focused on multifamily
assets. They own 10 ,000 units. So their most recent transaction was in Arizona,
Scottsdale, 117 million purchase price. When the seller bought it three years ago,
they bought it for 143 million. So it's a huge discount. And it was brand new. It
was built in 2021. The reason for the discount was the seller put a three -year
bridge financing back in 2021. So it's matured this May. So with Deutsche Bank,
84 million balance, right? So we financed the debt for 64 million fixed rate with
Freddie Mac. So there's a delta of 20 million. So you either sell or you need to
cash in refinance to come up with the 20 million delta so that's why there are a
lot of you know opportunities come from this situation. Yeah it makes sense I read
a report that in 2022 five times as much capital was raised for real estate then
2024 so far so if anyone's having trouble raising some capital you know there's
others out there as well the other thing that makes it more challenging even though
if you're in the business you have to plant seeds and gain new relationships right
now for later is just that some families are used to seeing and some investors are
used to seeing like a rescue capital deal coming in to recapitalize the platform or
distressed asset or hard money lending and the returns are pretty good and like John
maybe you're sleeping at night because you're on the debt side of the balance sheet.
When you have a traditional deal sometimes it can be a little bit harder right now
at this moment in time because of the families are used to seeing these kind of
rescue capital type deals come by has been my experience. Do you have any questions
out there in the audience for any of our panelists that you're curious about and
would like to get their opinion on? We had a couple questions planned for the
panel, but I want to make sure you can go down the line and provide like a
million dollar insight that you'd love to share at the room or answer as to one of
the questions we didn't get to. For example, Is there something out of favor right
now that you think is coming back soon or something so unpopular that nobody really
talks about it? And that might mean it's a good time to go in. Actually, like
Howard Marks from Oatry Capital, he's famous for saying that like when something is
unpopular and other people think you're not smart to go into it is when you can
get a good deal. And when they think that it's pure toxic, then sometimes it's the
best deal of a generation or of a decade, because it's so discounted and unpopular
right now. So we could answer one of those questions or just provide your number
one insight you want to leave the room with today that you think could, at least
as someone in the room, add $100 ,000 or a million dollars of value to. John, you
usually have an answer for just about everything. You want to start us out and work
your way down the line? - Yeah, I'm happy to. I just kind of piggybacking off of
what you started with respect to where we see opportunity. And again, I'm a real
estate investment trust. I'm a fund manager for REIT, so it's obviously very industry
specific. And I don't know how many of you out there are in the real estate world,
but what we're seeing right now is a maturity wall, where a lot of the debt that
real estate owners had are now
And this is creating a tremendous opportunity, right? I mean, again, not to give you
a real estate lesson, but there's two ways to make money in real estate. It's
either net operating income or your market discount rate. And they're both directly
linked to interest rates. So think about it. Your debt remains exactly the same
right now. Your rents are the same. Your operating expenses are the same. But as
interest rates rise, your cap rates also rise, which devalue your real estate. So
now you have a maturity wall, you're going to refinance, you are lucky if you're
getting 50 % of what your debt is today. That is going to create,
and we're seeing it, we're seeing it in the industry, it's creating tremendous
opportunities for real estate investors, because now they're able to go in and either
infuse equity, because the only way to refinance without getting a new mortgage is
to just pay down the loan, obviously, or they're just selling the properties
outright. So we see a lot of opportunity there. Right, I think it's really important
that one impact of what John just said is that right now, the last nine months,
more than the last seven years combined, we've seen investment managers stop
distributions, lower distributions, have to recap projects. In some cases,
investors get wiped out on projects and some investors, Rightfully so,
get upset when their money stops producing income for them that they relied upon, or
get upset when some money is lost, or there's a reduction in value. But the whole
industry is being impacted by this, unless you had long -term fixed 2 .9 % debt,
then that was smart of you to lock that in. But just know that even some of the
most honest, hardworking, high -integrity managers out there have to do some of these
things that John was just talking about. It doesn't mean that they misled you or
misled you on purpose, et cetera, as one of the risks, as one of the natural
fluctuations in the real estate market is what happens, right? So, Brent, any last
comments you'd like to share? Yeah, I mean, continuing on the theme of maybe what's
out of favor and on the real estate sector, I don't think it's quite 0809
opportunity, but within the distressed CNBS space, these bonds have traded off pretty
substantially. And there's people out there with specific expertise to really go after
that fulcrum security and cram down the equity and the junior debt. And these bonds
come along with special servicing rights. So you can go to the special servicers and
get an extension on the old debt that was issued three, four years ago at 3%.
So I know that a lot of these stuff has been thrown out, maybe with the bath
water, but there is single name CNBS where the underlying asset of the CNBS is just
one particular property, so you can really do your digging on that and you're not
just looking at a portfolio of 20 different properties within the securitization.
Just another big area that I'm a big believer in is just finding niche, uncorrelated
managers, You know, just good old fashioned portfolio, you know, construction, you
know, you're gonna have, you know, some things that sell off, you wanna have other
parts of the portfolio that aren't correlated. So things like appraisal rights,
mitigation, finance, California carbon credits, that's a niche beta, factoring,
you know, just to, you know, being able to kind of diversify your book portfolio
and uncorrelated investments, I think just creates a more powerful and high quality
return. - Great, awesome. Yeah, I think a lot of investors who see a lot of deal
flow, and like you have selected a lot of allocations after a while, if you don't
do a good job of what Dr. Jayne said, and what you said earlier about the unique
edge, everything kind of starts to look the same, like a lot of people email you.
It's like, I feel like I've read this email like 900 times before. So it's so
critical to appeal to people like yourselves that see a lot of deal flow to be
super clear on that unique edge, right? Awesome. Jim, any last comments you'd like
to share with the room? Any big insights?
In our industry in Salinas, I think I heard a stat earlier with one of the other
moderators about how many people were turning 65 years of age, 10 ,000 a day.
What we're seeing in our industry, all family -owned businesses, that is occurring.
They're not prepared for an estate as surprising as that may be.
They're not surprised They're they're not prepared to pass on their companies So then
you go to the real estate side from the code storage industrial Average age in
Salinas is 45 years of age There has been no upgrades in technology the debts come
and do, as you said. So we see opportunities there to move in from an educational
standpoint. Say, we can help solve your problem by working with your debt.
We can help solve your problem by doing some capital investment and bringing some
management expertise to our particular area that we know well. - Right, right,
makes a lot of sense. To your point on the debt side, and it being harder to find
the last couple of years we acquired about $5 million in real estate, we just did
all -seller financing, and our LTV is like 23%. Analyst -seller financing runs off
after three to five years, and we got some of those deals done at the height of
the real estate market. Now people are much more negotiable on getting seller
financing done because they may need that liquidity for another asset, and it's the
only way they can get the deal done sometimes. So I appreciate you bringing that
up. It's a time of opportunities. As long as Warren Buffett says, when there's a
flood, you want to be selling life preservers, not begging somebody one, because
banks don't want to lend money when people need it the most. They want to lend
money to the people who are so well positioned. They barely even need the money.
And Warren says that himself. He says, he doesn't use high debt, very low debt. And
then maybe once every 10, 20, 30 years, he'll put on a moderate amount of debt.
But that's like an see action, it's like a cash reserve. Regina, in the last
comments, insights you'd like to share with the room? - Maybe two aspects, one is
stay focused. Using the same example I just mentioned earlier, client has three
decades experience, focused on the same area. That's why when opportunity present,
they can take this opportunity. And they did that successfully in OA for the five
years between OA and 13, they achieved a 53 % IRR. That's why they are so confident
to use the same strategy right now, even though lower expectation may be 20 % IRR,
but still similar pattern, right? So you mentioned the stress in commercial rule
essay. Of course, there are stress, but like I mentioned, the crisis for some could
be opportunity for the others. And that's number one. And number two, I would Okay,
life long learning, that's to develop yourself. Like I myself am learning doing my
MBA program at Wharton University of Pennsylvania. So just to further broaden my
view. - Sure, yeah, it makes a lot of sense. One challenge of running this event
with 100 plus people on stage is that any one of these people has enough experience
to do a two hour workshop over a breakfast or a full day workshop for everything
they've learned and they're only up here for like a few minutes, but the point is
just for you to know who they are, where they're from, what they're focused on, and
then we can network with them during lunch and cocktails here in a couple minutes.
And then the favorite speakers from the audience will have back for some of our
mastermind, our investor masterminds, and do like a little bit longer fireside chat
to dig deeper into, you know, how Dr. Jane sources deals or something of that
nature. But do you want to finish us up with the last insight for the audience?
Yeah, - Sure, I would say to build off what Regina said,
opportunity hides in plain sight. If you don't like waiting for a cab,
build an Uber. You had to drive two miles to go pick a piece of gum, build an
Amazon. You had to go wait in the ER for three hours with a broken hand,
build a healthcare company, and then come pitch it to me. So, So, yeah,
opportunities everywhere, just think about your life, your experiences, and reflect on
them to derive insights that can change and meaningfully improve those experiences not
only for you, but also for others around you, and then have the fortitude to go
build something. Awesome. Appreciate that. Thank you. Thank you to everyone here on
the panel for and their thoughts and ideas.