Consultant Q&A

Babak

After ten years of progressive responsibility at Lowe Enterprises, Babak founded a commercial real estate advisory firm and commenced work as a professor at USC. During his career he has focused primarily on equity capitalization, feasibility and business plan execution for large scale mixed use development projects in Southern California.

How did you first get involved in real estate investment and asset management?

I started working as an analyst at a large institutional investment firm. In this role, I developed the critical thinking skills for not only acquiring properties but also “living with them” in executing hands-on asset management.

During your time at Lowe Enterprises, you’ve led investments for $300 million in value-added commercial acquisitions in the Western U.S. and mixed use development totaling $800 million in Southern California. Tell us about about your different positions at Lowe and what you’ve learned along the way.

I am fortunate for the breadth and depth of experience I gained over 10 years in Lowe Enterprises’ vertically-integrated, multi-disciplinary investment-operting platform. Leading the firm's expansion into mixed-use development taught me the intricacies of what I call “threading the double-needle”: securing land control on a feasible business plan, and, raising and structuring joint venture equity on a parallel path to purchase the land. This was aided by previously gaining experience as a development manager for two large-scale mixed- use properties where I managed a team of consultants to implement design and entitlements within a fixed timeframe and budget. Leading the firm’s West Coast commercial investment platform at a young age was my dream job even though times were tough in 2008! I learned how to make heads or tails of critical investment decisions during the financial downturn: Through identifying, pricing and securing distressed and value-added investment opportunities on a risk-adjusted basis across markets and property types.

In an article you authored in 2016 you say: “It is critical for brick-and mortar retail to play an internet-resistant role to promote and foster experiential human interaction.” Can you expand on this point and talk about the future of retail in general?

We are in the early stages of a sector-wide retail correction driven by technology and changes in consumer behavior. Both the purchase and distribution of goods is shifting from physical brick-and- mortar stores to e-commerce as evidenced by mass apparel store closures and increased online sales. Larger retailers are re-working their store models to serve as an extension of the retailer's online or “omnichannel” presence by doing what e-commerce cannot: bringing people together to physically interact and experience the company's brand and offering. Meanwhile, owners are trying to fill vacancies with other internet-resistant retail such as food and fitness to increase customer foot traffic. In terms of my firm’s focus, the retail correction translates into attractive opportunities to invest in the urban cores on the basis of “right-sizing” retail merchandise mix, and, repositioning to mixed use including creative office and apartments.

Tell us about a rewarding recent client engagement.

I was engaged by an apartment developer to provide strategic advisory for joint venture structuring and commercial space programming for a $60M residential mixed-use development in San Diego. I formulated a joint venture structure that provided optimal investor alignment, downside protection of the fee stream that was supported by the market and accepted by its equity partner. I was asked to formulate the “retail merchandising plan” for the commercial component of the project to obtain its investment partner’s approval to proceed with funding the land purchase. To the client’s surprise, I advised minimizing the retail component and incorporating creative office “spec suites” to generate the highest feasible value based on site, market, financial and design-cost feasibility. It was extremely rewarding to see our recommendations approved by the Client’s and its investor to move forward with purchase and construction.

Why did you decide to join StealthForce? What resonated with you?

Real estate is a multidisciplinary business requiring multiple skill sets and specialties. StealthForce's value proposition is strong in filling the critical staffing and consulting needs that continuously arise for every type and size of company. Leveraging technology to scale this offering makes it effective and exciting. I joined StealthForce to help more clients solve complex problems and unlock real estate value through advising strategy (investment and J.V./capital structuring), feasibility (redevelopment, tenant programming) and executing asset management for urban mixed-use properties.