Q&A with Quintin Primo
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|Since 1992 when Quintin Primo founded Chicago-based Capri Capital Partners, he has managed some $3.6B in assets on behalf of pension fund and institutional clients. His success as an entrepreneur and business leader (the Primo Center for Women and Children has raised over $5M in the last three decades) is legendary.|
|And on May 29, he will join Pearlmark Real Estate Partners co-founder and CEO Stephen Quazzo and other such luminaries for our Capital Markets Summit in Chicago. (Above, Quintin with President Obama. He tells us he's known the President since he was an Illinois senator and served on his national finance committee in 2008 and serves on the Illinois finance committee for 2012.) Today, we bring you this exclusive preview:|
Bisnow: How much capital do you expect to deploy this year compared with last year?
Quintin: Between $600M to $700M gross this year, sharply up from 2011, which was roughly half that, $300M to $400M gross in 2011. Many of the institutional investors, particularly pension funds, are increasingly interested in the separate account format versus the private equity format for three reasons: 1) greater control with an ability to own assets longer, have more direct discussions in terms of modifications to the investment structures and underlying debt; 2) the realization that your fellow limited partners can have a dramatic impact on how those funds are managed, particularly in adverse circumstances; and 3) a realization that anything that can be done in a private equity format can also be done with a separate account format.
Bisnow: What are institutional investors looking for in this market?
Quintin: Institutional investors, first and foremost, want income from US real estate investments, which provide portfolio diversification, resilience and returns, so especially in this market they want even more exposure. That’s also why pension funds have sought to develop separate accounts with US advisors like Capri to pursue income property investments in the US. Multifamily has proven to be most resilient on a secular basis. Returns on institutional core assets are between 7% to 9%.
Bisnow: Last month, Capri acquired the 23-story 360 Residences (above) in San Jose, Calif. for $118M on behalf of investors. What was the strategy there?
Quintin: It was the quintessential urban multifamily play. San Jose is a very vibrant, growing market. 360 is a well-located, relatively new building that we were able to acquire at a very good price. The strategy for investors is to give them the highest possible quality of real estate to include in their portfolios. That transaction was done in one of our large separate accounts. California and coastal markets are always attractive—they’re hard assets to get a hold of—when you are successful in acquiring them, they’re assets that you tend to want to hold for the duration. Many investors are now realizing these assets are so hard to acquire, they desire to hold them for as long as 10 to 15 years.
Bisnow: What is the “shifting paradigm” in multifamily real estate demand?Quintin: US demand is driven by different demographic factors than other Western developed countries. A third of our population is under the age of 25, roughly 100 million people, coupled with overall population growth of 1% per year, which is very beneficial to our economy. Those two stats mean multifamily will continue to soar over the next 10 to 15 years. Prime urban multifamily demand comes from the population of 21- to 34-year-olds, and we have plenty of those individuals here in the US that are renting. Why? There’s no quick rush to own a home. They have a desire for mobility and don’t want to be tied down by cost or inflexibility that home ownership provides.
North Bethesda Market
Bisnow: What does the European sovereign debt crisis mean for the US capital markets?
Quintin: First, it impacts the global flow of funds. Given serious clouds over the Eurozone economies, that capital is moving out of Europe and into markets like the US. Second, the overall issues with the European economies (Britain just officially went into a double dip), especially the economies of Greece, Italy, Spain, Portugal and earlier, Ireland, have caused major issues on the periphery and are potentially bringing and spreading it by contagion into more stable countries. All of this, with austerity measures being aggressively taken by sovereign governments (aggressively recommended by Berlin), is causing economic headwinds for the US given that Europe remains a major trading partner for us and our financial systems are very much linked. Our banks are linked.
Bisnow: Can you share a personal anecdote about yourself?
Quintin: The charity that I’m most passionate about is the Primo Center for Women and Children. And we recently had a Valentine’s Day bash to raise funds for the center and I had the great pleasure of playing the keyboards in my daughter’s band for its Chicago debut. She has a heavy metal rock band at the tender age of 15 that’s on its way to fame and fortune.