How do family offices find distressed retail deals?
Short answer: A neighborhood strip center can still be a good property after losing a tenant or running short on capital, S.L. Said. His review of the books helps distinguish that situation from a weak property.
At a Family Office Club interview, Richard C. Wilson spoke with S.L. Of Caprock Real Estate about distressed property and the firm's Midwest work.
S.L. On receiver access before sale
S.L. Said being a receiver lets him see an asset long before it goes to market. He said distressed assets may be available at a good price, though some are simply poor properties.
S.L. On reviewing property books
S.L. Said his accounting background helps him read books when a defaulted borrower has altered them. He uses that work to judge whether the issue is a bad actor, a bad property or both.
S.L. On rebuilding lender relationships
S.L. Said many people he had worked with had moved on or been promoted. He was renewing ties with attorneys, accountants, lenders and workout professionals ahead of more defaults.
S.L. On cash equity for distressed deals
S.L. Said his firm was assessing equity sources with higher risk tolerance. He said some deals may require cash because lenders aren't ready to make loans, leaving fewer bidders and potentially steeper discounts.
"They're willing to step up to the plate before everyone else is comfortable."
From Richard's exclusive Billionaires.com interviews
Lessons from Richard C. Wilson's one-on-one interviews, as published on each interview page.
- Anu Aga: Focus on one main cause. Her family found its giving more satisfying and impactful once it chose primary education for the underprivileged in India.
- Binod K. Chaudhary: Never chase a deal out of desperation. Stay cool and look at every part of the deal. Have your advisers and your finance team review it critically. Your counsel should review it too.
- Larry Connor: Learn from every mistake. Larry's team owns its failures and makes no excuses. They learn, change quickly, and keep getting better.
See the data
Frequently asked questions
How do family offices find distressed retail deals?
A neighborhood strip center can still be a good property after losing a tenant or running short on capital, S.L. Said. His review of the books helps distinguish that situation from a weak property.
What deal sizes did S.L. Consider?
S.L. Said the firm had looked at properties valued from 5 million to 50 million. He said the last two deals the firm worked on were in the low $20 millions.
What retail properties did the firm avoid?
S.L. Said the firm stayed away from big box centers because dividing them could cost so much that rebuilding might be cheaper.
Sources
Quotes are copied from the video captions and checked against the transcript. Timestamps link to the moment in the video. General information only, not legal, tax or investment advice.