Thought Leadership

One of my favorite classes in college was statistics which is defined as the science of collecting and analyzing data for the purpose of inferring proportions to draw outcome conclusions. While not the most exciting subject for some, I valued the logic of mathematics to project outcomes, which has been a trait valuable to our Buchanan Street investment activities. Today, we are inundated with statistical analysis and its hypothetical correlated outcomes.

In Robert Brunswick’s December 2023 Board Minutes from the Chairman, he touched briefly on some of his successes in philanthropy including the growth in Hoag Innovators, a philanthropic endeavor in partnership with Hoag Hospital targeted at catalyzing innovation in healthcare. This led my mind down a path of investing in what matters. Investing to have the means to be philanthropic, to be able to give your kids a better life than you had, to buy a house, to retire comfortably, and the list goes on.

My wife and I recently celebrated our 40th anniversary and by anyone’s standard, a worthy mark to properly commemorate. We decided that we wanted to organize a family trip with kids and grandkids to message the importance of this long-lasting union. We thought a trip to Sedona would be a perfect adventure with its natural beauty, art, recreation, and reasonable proximity.

Despite a wide array of headwinds currently facing the multifamily industry—including elevated interest rates, massive new construction deliveries and softening operating fundamentals—we maintain a positive long-term outlook for the sector.

I looked back and noted that in my June 2023 edition of “Board Minutes from the Chairman” we briefly discussed the nonbank lending space, sometimes referred to as shadow banking, with its significant influx of private equity. Upon further reflection, I recalled a previously penned article from 1992 entitled “The Dawn of the Financial Architect”, a piece I wrote about the tail end of the savings and loan crisis (S&L) and the formation of the RTC or the Resolution Trust Corporation.

Over the last 35 years, I have been involved in over $8 billion worth of investments encompassing over 300 separate transactions. I have served in the capacities of borrower, property operator, lender, developer, investor and GP/fund manager. As a result of these experiences, I have had a front row view into many real estate organizations and what happens in good times and in bad. I have also been fortunate to have 2 partners in business for 30 years, operating through multiple cycles, including the Great Financial Crisis (GFC).

I’ve learned over the years as an entrepreneur that not only do you need to keep innovating but be willing to break the status quo and embrace change. While most leaders thrive in flux, they overestimate other people’s ability to process change and today’s instantaneous technological shifts only exacerbate feelings of uncertainty and a loss of control.

Entrenched into the 5th decade of my real estate career, I can’t help but think that I’ve read this chapter before, taken the same meetings and asked the same questions. Mark Twain said it best in that history never repeats itself, but it does often rhyme and so it does today.

Since the start of the pandemic, corporate America rapidly evolved to the work from home model aided by technologies such as Zoom and Microsoft Teams. What started out as a government mandated necessity has now evolved into a bright contrast of different corporate strategies, some embracing work from home models and others recognizing the many pitfalls of working remotely. Furthermore, tight labor markets have provided employees with the power to determine how they want to work, many electing to work from home.

No doubt we have all enjoyed the classic holiday film It’s a Wonderful Life, and in my household more than once. To remind everyone, the plot is built around the Bailey Brothers Building & Loan business and George Bailey’s near-death experience only to be saved by an angel who seeks his wings by showing George what the world might be like without him and his community savings bank. Our Chairman Minutes would be remiss if we did not catch-up on the current day banking mess and its impact to the real estate industry and the potential offing of a new credit crisis.