Best Ever Conference 2024: Days 2 and 3 Recap

The second and third days of the Best Ever Conference offered attendees an immersive experience, brimming with invaluable insights from a lineup of distinguished commercial real estate professionals. From J Scott's illuminating session on the intricacies of raising capital to Anthony Vicino's forward-thinking strategies for harnessing the power of social media in 2024, the agenda was designed to empower and inspire.

Day 3 brought the highly anticipated Pitch Slam finals, where four exceptional finalists showcased their innovative ideas, vying for a substantial prize pool of $600,000. In the end, two worthy winners emerged, concluding an unforgettable conference that left attendees armed with the knowledge and motivation to excel in their 2024 CRE endeavors.

An Entrepreneurial Journey: Conquering the Brokerage World

Kyle Matthews
Founder, Chairman, and CEO, Matthews Real Estate Investment Services

Kyle Matthews shared insights on the rapid growth of his company Matthews Real Estate Investment Services, navigating the challenges of the COVID-19 pandemic, the current state of the commercial real estate market, and the importance of mastering fundamentals and building strong relationships with brokers at all levels.

• Matthews Real Estate Investment Services has grown rapidly over the past nine years to become one of the top commercial real estate brokerages in the country, with Matthews attributing much of his drive to his family's legacy of success in professional football.
• During COVID, while other brokerages were cutting back, Matthews decided to double their summer hiring class in June 2020, bringing on 270 new hires. This bold move enabled them to gain market share.
• Matthews believes commercial real estate transaction volume in 2024 will remain historically low, similar to 2023, which saw a 55% drop and was the worst year since 2013. However, he sees this as weeding out weaker players and being an opportunity for those who persevere.
• Seller sentiment is finally shifting, with pricing moving faster in the last 90 days than in the previous nine months. Yields are reaching a point where buyers see opportunities to make money. Matthews believes buyers will be well protected on a cost basis for deals done in the next 12–18 months.
• He advises investors to build relationships with brokers at all levels, as junior brokers are often the ones sourcing deals in the sub-$10 million space. Kindness and investing time in these relationships can lead to getting the first look at deals.
• Matthews emphasizes mastering the fundamentals and "crap work" during downturns to be positioned for success when the market rebounds. For brokers, this means maximizing time in the office, prospecting calls, and client meetings/pitches.

Best Practices For Real Estate Sponsors Raising Money From Family Offices

Ron Diamond
Chairman & CEO, Diamond Wealth & Family Office World Media

Ron Diamond believes that the $84.4 trillion wealth transfer from baby boomers to the next generation over the next 20 years presents a massive opportunity for real estate sponsors who can build authentic, trust-based relationships and demonstrate value to tap into family offices, the patient capital source that is poised to disrupt the private equity industry.

• Family offices are starting to disrupt the private equity market because they have patient capital and are better aligned for the long-term compared to private equity's three- to five-year flip model.
• Getting access to family office capital is challenging because the industry is fragmented, inefficient, and relationship-driven. Sponsors need to focus on building authentic relationships and adding value, not just pitching deals.
• Over the past two years, many family offices lost money on direct real estate deals as interest rates rose. This presents an opportunity as they reevaluate and look to outsource real estate investing to experienced sponsors.
• The key to working with family offices is establishing trust through relationships. Communicate consistently, especially when things are challenging. Demonstrate integrity and authenticity.
• Conferences are not the best way to connect with family offices, as most are pay-to-play. Instead, get involved philanthropically, send helpful content without asking for anything in return, and surround yourself with smart people you trust.
• Family offices are at a tipping point and will become as disruptive to private equity as private equity was to public markets. Real estate sponsors who can navigate building long-term trusted relationships have a huge opportunity to tap this capital source.

What’s Happening in the Housing Market Today?

Kristin Matthews
Vice President, Consulting, John Burns Research and Consulting

Despite ongoing affordability challenges, Kristin Matthews presented a cautiously optimistic outlook for the U.S. housing market over the next five years, supported by recovering household formations, strong demographics, an undersupplied market, and promising signs in the single-family rental space, assuming the economy avoids a recession.

• The housing market is showing signs of recovery, with 64% of markets rated as normal and 20% as strong. Southern California is doing very well due to high incomes.
• The U.S. is still undersupplied in housing, with low resale inventory (less than two months’ supply nationally). New home builders, especially the big public ones, are helping to fulfill some of the supply shortage.
• Affordability remains a big issue in many metros as incomes haven't kept up with home prices. Builders are getting creative with incentives and focusing on buyers' monthly payment rather than purchase price.
• The single-family rental market outlook is positive, with rents forecast to grow over the next five years, though institutional investor activity has slowed. Mom-and-pop investors still dominate this space.
• Demographics are important for housing — household formations dipped during COVID but are recovering. The 70+ and 25–54 age cohorts will be key for housing demand going forward.
• Overall, there is a cautiously optimistic outlook for housing over the next five years, assuming no recession. Starts and demand should rise in 2024, and the spring selling season looks promising so far.
• Risks remain, including affordability issues, and mortgage rates are likely to stay elevated. But strong employment and undersupply provide tailwinds. The market is bumpy but recovering from the big post-2021 slowdown.

The Economics of Capital Raising

J Scott
Partner, Bar Down Investments

J Scott emphasized the importance for real estate syndication operators to understand the economics and legalities of capital raising, as earning around 10 cents per dollar raised can be the most profitable use of their time if done properly — but they must ensure compliance with securities laws to avoid legal trouble.

• There are many laws and regulations around capital raising, so it's critical to ensure you are raising capital legally, such as through a licensed broker-dealer or bringing in joint venture partners. Violating these laws can lead to jail time.
• In a typical syndication deal, the general partnership (GP) receives around 30% of the equity, which is then split amongst various roles: finding the deal (5%–10%), due diligence (7.5%–10%), providing risk capital (5%–10%), being key principals on the loan (10%–20%), asset management (20%–40%), and capital raising (~30%).
• Capital raisers, if using a licensed broker-dealer, could earn around 30% of the GP equity, which translates to about 10 cents for every dollar raised. If the operators raise the capital themselves, they save that ~30% of GP equity.
• On a sample $20 million deal with $8.9 million of equity, a capital raiser bringing in all that equity could earn around $900,000 (30% of the estimated $3 million the GP earns on the deal).
• It's important for operators to understand what they earn for each activity, including capital raising, to determine the highest and best use of their time. If raising capital themselves provides the best return on time, they should focus heavily there.
• J Scott personally spends a lot of time capital raising because earning that 10 cents per dollar raised is the most profitable use of his time compared to giving up that equity.

Building the Brand: Leveraging Social Media in 2024

Anthony Vicino
CEO, Invictus Capital

By consistently creating valuable temporary and evergreen content, engaging with target audiences, building an email list, and mastering the art of storytelling, real estate entrepreneurs can attract more deals, partners, and capital than they can handle, amplifying their impact as agents of change in society.

• There are two ways to generate leads — being a hunter (actively pursuing leads) or a farmer (creating content to attract leads). Being a farmer allows you to scale beyond your individual efforts.
• The key is to consistently put out content on social media. Temporary content (posts, stories) makes people aware you exist and drives traffic to evergreen content (blogs, videos, podcasts).
• Evergreen content establishes credibility, transmits ideas, creates connections, and most importantly drives traffic to your website/email list.
• Your website has one key objective — to get visitors' contact information so you can follow up with them, not just look fancy. Your email list is your most valuable business asset.
• Consistency is critical. You need to keep putting out content even when it feels like no one is paying attention. Successful people failed a lot to get where they are.
• To jump-start growth, engage thoughtfully in the comments of accounts that already have the audience you want to attract. Provide value there instead of just pitching.
• Build your system in reverse — email list and website first, then evergreen content, then temporary content.
• The secret to viral content is storytelling. Learn to tell engaging stories about what you do, how, and why in a way that influences your audience. That's how you attract more leads than you can handle.

Pitch Slam Finalists & Winners

On the final day of the Best Ever Conference, four finalists pitched unique real estate investment opportunities to a panel of judges, ranging from ground lease and private lending funds to retail strip centers and self-storage conversions, vying for a total of $600,000 in prize money.

• Vali Lazarescu from Group RMC pitched a ground lease fund targeting a 21.3% IRR and 3.86x equity multiple over seven years, with 12%–14% cash-on-cash returns. The fund invests in institutional quality ground leases, often providing both the ground lease and mortgage financing.
• Vanessa Peters and Maurice Johnson from Rockstar Capital pitched a private lending fund providing due diligence/pursuits costs capital to their partner BRD Land & Investment which does land entitlement. They target 25%–30% annual interest rates and a 60/40 profit split to LPs, with a 10% preferred return.
• Zach Alms from 507 Capital pitched a retail strip center fund targeting a 12%–18% IRR and 1.8–2.0x equity multiple. They are raising $10 million to acquire 6–10 strip malls across the Midwest, with in-place cash flow from credit tenants. The fund has a 6%–7.5% preferred return based on investment size.
• Clint Harris from Nomad Capital pitched a $10 million self-storage conversion fund targeting a 19%–22% IRR and 3.2–3.6x equity multiple over 10 years. They acquire vacant big box retail at a low-cost basis and convert to climate-controlled self-storage. A cash-out refinance is targeted in years 4–5.
• Judges asked probing questions about track records, fee structures, debt terms, tenant profiles, competitive advantages, operating histories, and more to pressure test each pitch.
• All four finalists brought unique strategies, with the judges stepping away to deliberate and select a winner of the $400,000 first prize and $200,000 second prize. 

The judges deliberated and made their decision relatively quickly after the pitch presentations. Vali Lazarescu with Group RMC was selected as the first-place winner, receiving the $400,000 investment prize. Zach Alms with 507 Capital won the second-place prize of $200,000.

The judges emphasized that while they made their selections based on the pitch presentations, the prizes are still subject to full due diligence before the investments are finalized. Attendees were encouraged to conduct their own thorough due diligence if choosing to invest with any of the companies that won or participated in the pitch competition.

Disclaimer: 

The views and opinions expressed in this blog post are provided for informational purposes only and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.