After nearly a decade in institutional real estate for companies as renowned as Carlyle (VP, Fund Asset Mgmt.), Wachovia (VP, Head of Equity Asset Mgmt.), and PRP (Dir. of Asset Mgmt.), Robert struck out on his own to launch KB Advisors, a real estate and capital advisory consultancy. Based in DC, he provides advises owners across buy/sell decisions, capital sourcing strategies, staffing reviews, general asset management and more.
What drew you into the real estate industry?
The natural draw to real estate is it allows for exposure to law, finance, engineering, marketing, and sales. My strengths were finance and legal and everything else is just common sense. I believe real estate is one of the best places to start a career as you come equipped with the fundamentals. If you shop at retail centers, work in an office, live in an apartment, and have stayed in a hotel... you are a natural consumer and can bring that perspective to your evaluation and understanding of real estate.
As Head of Equity Asset Mgmt for Wachovia you led a team of asset managers in oversight of structured finance equity investments across 60 commercial properties. What part of that role was the most satisfying or valuable for your professional growth?
The best part of that experience was building out the asset management team and setting the culture and expectations for the group. Over the years you come to appreciate that your success is based on working with great leaders, mentors, and the value of your business partners/relationships. It is only when you have built strong relationships that you can then leverage them to drive returns. This applies at every level and every situation. The other best part was the exposure to multiple JV partners and operators that accelerated my learning curve of what works well and what are some new trends/value optimizations strategies that I could then roll out to other assets.
Having worked for Wachovia, PRP, Carlyle and more, you've seen various institutional frameworks for asset management and equity placement. What are some of the structural best practices you've seen with regard to deal or asset management?
My experience with Wachovia PRP and Carlyle were at different stages in the real estate cycle but some common best practices on structuring stood out. They are as follows:
1) Be smart about leverage. The tendency to maximize debt in order to increase returns can be costly. Max proceeds may come from a lender that plans to sell or securitize your loan. Your ability to get a loan modification to address a change in your business plan may take way too long, cost a lot more money and be illogically denied by a Special Servicer running their platform as a legal profit center.
Carlyle’s use of leverage was by far the most impressive I’ve seen. They chose lenders not by max proceeds or in some cases best pricing, but rather by familiarity with the fund ownership structure, ability to close on schedule, plans to hold the loan on their balance sheet and often floating rate structures that maximized exit flexibility. As business plans changed it highlighted the value of the debt structure and relationship lenders. Carlyle was very strategic about not having the debt dictate the deal.
2. Maximize the learning curve through transactional exposure. With regards to asset management best practices, my advice comes from operational transactional experience with all asset classes and on a national platform. I encourage more junior real estate professionals to do this. That is the best way to see what is working well in particular markets and how to apply those practices to others to maximize returns.
3. I am also a firm believer that asset management is about more than just maximizing returns. There is an offensive side to asset management and there is also a defensive side where you take action and spend money to protect your equity. Recognizing this will allow you to best serve your investor’s interests and manage returns in good times and bad.
In 2015 you launched KB advisors and became an independent consultant. What motivated you then, and why did you decide to join the StealthForce platform?
I launched KB Real Estate Advisors to enter the consulting realm and take on part time assignments while also caring for and spending time with my father who was battling cancer. It was a very rewarding time given it provided me an opportunity to work with some great groups and take on assignments that really interested me. One of the biggest challenges for consultants is the need to balance focus on projects with sourcing new potential assignments. StealthForce provides a great opportunity to solve that problem and in a way play matchmaker with clients and consultants. This is a very attractive structure and if it can grow into repeat assignments and long term working relationships then I feel it will be home run and one of my best decisions.
Tell us about a satisfying or surprising client engagement? What did you learn?
As any consultant knows, the initial ask is sometimes different from the final need. As the parties interact, there can sometimes be an evolution of the engagement.
On one assignment I was working for a group seeking venture capital, tasked with pulling together pitch books and getting them ready for a road show. Through due diligence I realized that additional time and work was required before hitting the capital raising circuit. My recommendation was to hit the pause button and rebuild/restructure prior to going to market. While it reduced my own income on the project, it was in the best interests of the client, and I take my clients’ interests and my reputation seriously. It’s critical building a consulting practice. The ultimate outcome for the client was favorable, saving them money, jobs, control, and creating value when they eventually go to market in the future.