Meet The Dealmakers

325 of you joined us Tuesday at Bisnow’s That Capital Stack – What’s Next?, where Loquidity CEO Jesse Clem gave opening remarks on crowdfunding, the latest technology disrupting the capital markets. After the passing of the JOBS Act and an SEC rule change allowing accredited investors to be generally solicited, Jesse created Loquidity, a crowdfunding platform focused on community-funded real estate investments in the Midwest. Real estate crowdfunding platforms have raised $135M as of July, and they are the No. 1 predicted growth segment in the sector, he says. Loquidity’s deets: deal size is $2M to $50M for debt and equity raises, investments start at $5,000, and expected returns are in the 7%-plus range. 

Reznick Capital Markets managing director Mike Hartman moderated our Dealmakers panel, where panelists also named their fave bands in honor of Lolla this Friday. (Mike’s is the Beastie Boys.) With a background in investment banking and principal investing, Mike helps sponsors, owners, operators, and developers source capital for any and all deals (acquisitions, recapitalizations, developments, etc.). Deal participants don’t feel like they’re moving forward unless somebody is getting screwed, he jokes, drawing an apt comparison to an old New Yorker cartoon with two dogs in business suits sitting at a bar. “It’s not enough that we succeed, the cats must also fail.”

Pearlmark Real Estate Partners managing director Doug Lyons, who’s looking forward to catching Lorde at Lolla on Friday, is seeing institutional capital flow into secondary markets like Minneapolis and Nashville in a search for yield. Deep value-add in urban markets is one of the few plays left for mid-teens returns other than development. Many domestic institutional investors have shifted from core to value-add strategies, he says. (Unlike capital from abroad, which likes trophy assets in primary markets.) Institutional capital burned by discretionary funds during the downturn has been looking to separate account structures with more control (making fundraising a challenge), but they're cumbersome for ill-equipped investors to get capital deployed in the sector, Doug says.

Laramar Group co-founder and prez Jeff Elowe (a Beatles fan) says you have to have a terrific track record to raise a comingled discretionary fund in this climate, along with a specific plan for how you’ll achieve your stated yield. An eye-opening stat: almost 50% of institutional capital goes to a small group of big guns (Blackstone, Colony, Lone Star, etc.), leaving very little for the rest of us. On foreign capital, Jeff notes that cities in the central part of the US look very cheap to them, and it’s only a matter of time before they hit the ‘burbs. View more event pics here.

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