Center Capital Partners' opportunistic real estate strategy

Transcript

My name is Alex Valner, I am the president and managing partner of Center Capital Partners. We recently founded Center Capital Partners at the beginning of this year in 2021. Center Capital Partners focuses on high-quality real estate assets across primary and growth metropolitan areas within the United States. We focus on the major asset classes and we focus across the board on opportunistic investing in those asset classes.

I think our most sustainable edge is our long-term horizon. We invest without a timeline horizon, and every deal we buy, every investment we acquire, we show that the projected hold five years, seven years, ten years, but at the end of the day, if you can be patient and if you really believe that you're making a bet in the USA with us in our mind and you believe that we're going to buy you well in the right places, with time we'll be okay.

The whole team comes from purely institutional backgrounds, the top tier shops, individuals from Blackstone and Apollo and Estelle, and my old shops myself where I was based, Northwood Investors and Canyon Partners prior to Center Capital. And in general, the way we approach the world is very disciplined. We do deep dives into the data. We chart out and look at the future as best as we can. That's really our approach. And we have a passion and a charisma that I think we bring that outperforms most. I love high barrier to entry markets. I love supply-demand imbalances, simple top-down macro-level data that helps us think through the investments we're making and we get behind secular tailwinds and thematic, you know, different themes across the board in which we can deploy our capital in a smart manner.

We have two types of main mandates with our capital. The primary investment source that we seek is deal-by-deal investments, and we do actual asset investments but on the flip side, we actually also leverage our network of relationships across the board. We have sister companies that are in the private equity and hedge fund space and venture capital space that help us create these ideas. We focus on platform investing as well. 

So I'm happy to maybe walk through one property-level investment as well as a platform investment to help you kind of get the sense of the two different things we do. You know, one example of an investment we made, we acquired a student housing portfolio right off of University of California, Santa Barbara. The reason for that was on a high-level macro level, there is an inarguable supply-demand imbalance in that market. There is a lack of beds and a lack of housing that needs to be brought into this market. Meanwhile, you have a population base on the macro level that's been growing at 2% per annum. There is zero projects on the pipeline between county approvals, city approvals, and Coastal Commission approval. It's a pretty tough entitlement process and that means that there will not be any new housing delivered in this market for at least in my projections, I'd say three years, most likely five years, which means if you can go in fix up the units quickly and add beds to it, you can help alleviate that crisis a little bit sooner and add beds into the community.

Pivoting over to the platform creation. We took a look at airfields across the United States, and my vision and the team's vision better said is that in our eyes, airfields are beachfront real estate. You can never recreate an airfield closer to a city urban center that exists today because of the land that is required to amass an airfield, hundreds, hundreds of acres. We invested into a company with the sole approach of acquiring the leasehold interest in land on airfields across the United States in primary and growth markets. You know, the airfields, most of them are government-owned and municipality-owned. They need to create these partnerships with individuals who will come and develop on their airfields and build hangars because they don't have enough hangar space that can store the aircrafts that are traveling and coming on their airfield facilities. We made the investment to go out and develop those. And that is, you know, in my mind, a really attractive investment because you're getting behind infrastructure, you're getting behind the trends in aviation. And it's all principle based on the simple macro-level concept that the land on airfields is, you know, a finite number of parcels that if you can control that you can differentiate yourself. 

Something that's so critical to our investment thesis is, is risk mitigation. We're going lower leverage. We're going 50% loan on that and we may even go 45% loan. And the way we differentiate ourselves is how we source our deals and how we move quickly. And that's how we can get our returns that we get. 

I think the best investors for a fund like mine would be individuals that have focus in wealth creation, principle preservation, and real ability to have patience to unlock the most you can out of real estate.