Is Kettler the Next JBG?
Bob Kettler has become a huge player in multifamily, JV’ing with partners like JP Morgan, Mass Mutual, and ING. But could he pivot to his own private equity shop and financing?
That’s what he seemed to be musing last week at our Bisnow National Multifamily Summit (BMAC) at the JW Marriott. With fellow regional giant Bryant Foulger doing the moderating honors, we wondered what one luminary would ask another. (Besides whether they like our theatre-in-the-round format.) Bryant drew from Bob the thought that he wouldn’t mind raising his own PE fund. Why? Because although he’d give up some upside, he’d get fees for money under management to help feed the beast that is a development company with its constant overhead, as well as have more control over exit that he must now share with major investors. He’s said he’s learned a lot about the advantages of PE in working with Carlyle.
Bob’s built a massive empire: He’s developed 46,000 lots, 15 shopping centers, 10M SF of commercial, eight golf courses, $1B worth of condos, and still has some dry powder, like 2,000 infill sites. He also manages 30,000 units for others—and likes the cash flow and additional infrastructure it provides. He’s become the 16th biggest multifamily developer in the US and has been named Developer of the Year by the NAHB. Still, that’s not the coolest thing he’s done. When he was 19, he sailed to South America and back—for over a year. The only place he seems unlikely to sail is into the sunset.
Kilpatrick Townsend’s Barry Fleischman, with the mic, guided a discussion among a remarkable continuum of capital sources: Behringer Harvard CEO Bob Aisner, whose firm has raised $6B in the last 10 years from many tens of thousands of small investors, most of whom seek current yield rather than “total return” (ie, including appreciation); Waterton’s Michelle Wells, whose big funds can be financed by 15 partners who each write a check for $50M or more; and Milestone’s Jeff Goldberg, whose firm has both a public REIT for cash-flowing, stabilized core-plus assets, and a private side with high-net-worth investors looking for value add and total return. Still, they share a concern that 2015 may be more challenging in capital raising given oversupply of product and higher pricing. Thus they also had a discussion on managing expectations
JLL mid-Atlantic multifamily team leader Scott Melnick helped sell a billion dollars of apartment houses this year, but sees continued high desire for product, from brand new to Class C.
Pantzer Properties co-president Jason Pantzer, above, did a half billion of transactions as "situational buyers," trying to "pick up fumbles" like brokerage processes gone awry or poor management, where they can add back value. Total US apartment sales in Q3, Stewart Title's Gary Cortellessa said, came in at $27.5B, up 18% over Q3 '13. Top reps of Fortress, JBG, Morgan Properties, and Transwestern echoed the theme that competition is intensifying with so much low-priced debt chasing transactions, and spreads down, perhaps a good time to be a seller. (Coverage continues later this week.)
Thanks to the 500 of you who attended--and did so during though your stomachs were rumbling as Thanksgiving approached.
We didn't discourage that. That's our own Ryan Begelman and Mike Ponticelli dressed as a Pilgrim and turkey, respectively, trying to blend in with developers Doug Firstenberg, Chris Antigone, Bob Kettler, and Bryant Foulger.
We hold a bunch of large national summits now on topics like multifamily, hotels, healthcare real estate, student housing, and data centers. So fancy-pants are these one or two day-long events, we even have our own "gobo" projector. We think that technically stands for "goes before optics," although we are so intellectual we just call it our Batman lighting.