Investing in CRE amid market volatility

The mindset pays off future dividends, he suggested: “But you’re building a relationship that at some point, they’re going to remember that and they are going to want to write you a check at some point in the future. It’s a long game of capital raising where if they’re hearing a niche strategy and they’re hearing a differentiated firm, you will stand out. I guarantee that.

“In the last 90 days, we’ve had 65 meetings on the capital raising side. And believe me, people have other stuff that they could be doing. They’re only being set up because they’re interested to hear that niche strategy, that niche story that you know what is – You’re different than most other firms, and those have led to second and third meetings. And so – while the world is volatile, we kind of like that because we can then actually stand out.”

Schapiro was similarly upbeat: “We raised last year $350 million, plus or minus.
It was a great year for us. We created some products that investors were interested in.
And I think what we are going to see and by the way, and it’s just not an easy fundraising environment because certainly when you get to the institutions, there’s a denominator effect, right… So you really need to create something that resonates with them.”

Why is differentiation so important?

He agreed with the notion of differentiation: “You need to differentiate yourself. But I think what you’re also starting to see is, in the world that we’re in today, there will be some distress for some people who have not structured their deals appropriately and are going to feel some pain, and that creates opportunities for groups like Jeff and I on the buy side. And so we are sort of excited about seeing that part of it, in terms of being able to take advantage of those opportunities.”

In the way of a historical perspective, Schapiro described the capital-raising strategy at the launch of his firm versus how it’s done today. “We started in 1972 when we bought our first apartment community in Brooklyn, Maryland, for $3,000 a door, when rents were $59, including utilities. And in that case, we were using pretty much our own equity. The entire deal was about $600,000. And then we bought our first shopping center in 1978 in Fairfax, Virginia, for $26 afoot, and that it once again was us using our own internal equity.