Beyond The Bio: 16 Questions With Avanath Capital Founder Daryl Carter
This series profiles men and women in commercial real estate who have profoundly transformed our neighborhoods and reshaped our cities, businesses and lifestyles.
After years of observing and working as a commercial lender for a major bank in Chicago in the 1980s, Daryl Carter made a leap of faith.
Carter, the founder and president of Irvine-based Avanath Capital, was 33 years old when he and partner Quinton Primo III started their own commercial real estate company called Capri Capital.
"The odds were against us as two young African Americans in the commercial real estate sector," Carter said. "But we built a company, Capri Capital, with $8B in assets under management."
After receiving a master’s degree in architecture and an MBA from MIT, Carter began his career as a banker in 1981, working in the real estate commercial lending group of Continental Bank in Chicago.
At Continental Bank, he met several people who inspired him: David Neithercut, the former CEO of EQR; Peter Donovan of CBRE; Mary Ann King of Moran & Co.; and Don Smith of Jupiter, Carter said.
He also met prominent real estate developers and investors, including Sam Zell, Jerry Wexler, Jim Klingbeil, Tom Moran and Jeff Stack.
"I observed their capabilities to create wealth through their creativity, hard work and resourcefulness," Carter said. "I also saw that they survived the hard times through perseverance and sheer courage."
When it came time to strike out on his own, he said to himself, '"They put on their pants the same way that I do — I can do this, as well."
He said starting his own business was exciting. But the odds were against him and his partner.
In a previous interview with the LA Times, Carter said while he and Primo were looking to fund their company, they were rejected 56 times before someone said yes.
Carter left Capri Capital to found Avanath in 2007. The name is blend of his two children's names, daughter Ava and son Nathan.
It has been an up and down and up journey but he wouldn't have it any other way. As an African American, he hopes to inspire the new generation of entrepreneurs trying to strike out on their own.
"Little did I know how hard it really is to create sustainable companies in the commercial real estate industry," Carter said. "Hopefully, I can inspire younger people in the way that Harper, Moran, Klingbeil and Stack did for me 38 years ago."
Bisnow: What is your favorite part of your job?
Carter: My favorite part of my job is interacting with so many interesting and diverse people — including my Avanath team members, the residents in our communities, government officials, community organizations, our investors, our lenders and other apartment owners. Investing in affordable and workforce housing touches multiple constituencies and people.
Bisnow: What is the worst job you ever had?
Carter: My worst job was being a busboy at Elmer’s Hamburgers on the West Side of Detroit. Elmer’s was a White Castle clone with high turnover — so there were always messes to clean up. It didn’t help that it was a frequent target for armed robberies.
Bisnow: If you weren’t in commercial real estate, what would you do?
Carter: I would be an NBA general manager and believe that I would be a good one. I love basketball and have a good base of underlying strategy. And, I strongly value analytics, which are having a major impact in the sports world.
Bisnow: What deal are you proudest of?
Carter: I am most proud of our acquisition and renovation of Northpointe Apartments in Long Beach, California. It had multiple challenges and adversely impacted North Long Beach when we acquired it. Our investment and revised strategy improved the quality of life for the 528 families that live there, as well as the surrounding neighborhood.
Bisnow: What deal do you consider to be your biggest failure?
Carter: No question, my biggest failure was the Simpson Affordable Housing acquisition, an operating company comprised of 26,000 tax-credit apartment units. This was Avanath’s first deal — closed in May 2008 and financed with a one-year bridge loan that had to be repaid in April 2009. The world went to hell during the peak of the financial downturn and there was no new debt or equity available to pay off this bridge loan. We lost the portfolio and I lost $20M in cash equity — a devastating personal loss for my family. Nevertheless, it was an incredible learning experience and refined our investment strategy. I now view my financial loss as very expensive “tuition” which made me and my Avanath team much better investors.
Bisnow: What is your biggest pet peeve?
Carter: I am bothered by people who are prejudiced or display bigotry for people that are different from them.
Bisnow: What is your greatest extravagance?
Carter: My greatest extravagance is our courtside season tickets for the LA Clippers basketball games. Our seats are right next to the Clippers bench, which has provided an opportunity to get to know the players and the coaches and provide a great view of the games. I’m hoping for an NBA championship this year!
Bisnow: What motivates you?
Carter: About 20 million rental households in the U.S. are burdened by rents that are too high for their incomes. Too many of these households live in properties that are substandard. Many of them are in communities that have been underserved by investment capital, like my old neighborhood in Detroit. So, there are immense needs for quality affordable housing that Avanath creates. We own 10,000 units — which represents only 0.05% of the market need. Our company, our industry and our government have much work to do. I get up every day at 5 a.m. to do my part.
Bisnow: What advice do you wish you got when you started in CRE?
Carter: I was blessed to receive great advice from a few great mentors who taught me analysis tools, dealmaking, market analysis and other technical matters — all useful. But, building a great company requires a focus on people and building great teams — something I have learned over the years. I am very proud of the team we have at Avanath. We have a talented and diverse team that share a common mission and passion for providing the best to the affordable housing sector.
Bisnow: What is the biggest risk you have ever taken?
Carter: Leaving a great, well-compensated position with a large company and starting my first company, at the age of 33. I didn’t realize how much I didn’t know — but my former partner, Quintin Primo, and I worked very hard and just figured things out. Certainly, the odds were against us as two young African Americans in the commercial real estate sector — but we built a company (Capri Capital) with $8B in assets under management.
Bisnow: What keeps you up at night?
Carter: What keeps me up are risks that we can’t control — a significant one being the impact of climate change on our business. Specifically, I worry about hurricanes in the Southeast and wildfires in the West. We certainly do what we can, both in risk management and asset investment measures, to mitigate the risk. But both hurricanes and wildfires are increasingly more intense.
Bisnow: What is your favorite place to visit?
Carter: Hawaii — the weather is perfect, it has great restaurants and golf courses, and you don’t need a passport or different currency to visit.
Bisnow: Outside of work, what are you most passionate about?
Carter: There is no question, outside of work I am most passionate about my two children, Nathan (17) and Ava (15). My company is named after them (AVA and NATHan). Both are elite athletes. Nathan is a leading amateur golfer, who competes at the high school and amateur level. Ava is a top high school basketball player. So, at home, there is lots of golf with Nathan and lots of basketball (and H-O-R-S-E) with Ava. I am increasingly on the losing end of our golf matches or basketball games. I am 6’8” and both are getting close to me. Nathan is 6’6” and Ava is 6’3”. I am blessed that they share my affinity for sports.
Bisnow: What CRE trend do you think will have the most impact over the next few years?
Carter: Technology will have the most impact in the future. There are major cost savings and revenue-generation opportunities associated with “smart” apartments.
Bisnow: What would people be surprised to learn about you?
Carter: I am great on the grill and would love to enter a barbecue competition cooking either brisket or baby back ribs.
Bisnow: What do you want your legacy to be?
Carter: That my efforts have stimulated more investment capital to flow in affordable housing and underserved communities.