Friday, September 6, 2013

On the Road...literally! / The emerging class

On the Road…literally! 
The 11-hour drive between New York and Asheville, North Carolina, over the Labor Day holiday weekend was pretty smooth.  Fortunately, I adopted a fairly Zen approach to driving some years back – rather than getting upset at something a driver does I simply expect that people will do the dumbest thing possible and when they prove me right I smile to myself and say, “I knew you were going to cut in front of me, across three lanes, almost missing your exit because you were talking on your phone!”
Making a last minute decision to visit my older son, his wife and their two sons (ages 4 & 2) was a great idea – for all of us.  Based on our collective schedules, I wasn’t certain when the next time a family visit would be possible.
Spending lots of time with the boys was really fantastic.  Seeing how much they had grown, even in the past few months, is remarkable (as was the increased curiosity level of of all things mechanical - especially cars - of the older brother Sean).  We played with puzzles, built a car wash with Legos and invented some new games including ‘close-your-eyes-and-when-you-open-them-see-the-magic-that-happened.’  A special treat was a visit to Splasheville (as in Asheville) …an interactive fountain where children of all ages get wet walking / crawling / running through randomly sequenced bursts of water.  Seeing the joy of the children as they watched the water spurting out of the ground and observing the smaller children get braver and braver about getting wet was a treasure.  While Sean got soaked, Gavin thoroughly enjoyed himself running around the perimeter of the fountain.  Actually, it wasn’t really about what we were doing at all - it was just the time we spent together that truly mattered.  
People have talked about the concept of ‘quality time’ with children as being important. I decided many years ago it’s also the quantity of time that is just as important with kids.  More is usually better.
Physical distance between families creates a challenge, which Skype - although making a good attempt – cannot replace.  When seeing you on a computer screen your grandson can’t climb on your lap and say, “Tell me a secret, Grandpa.”  He can’t take your hand and say, “Come out and watch me ride my bike” or “Show me the motor of your vehicle!!” (This really happened!)  Face to face interactions are precious times, and overnight visits create a dynamic that often doesn’t surface with a brief meal or a short trip to the zoo.  I think it’s important to be in the same place for evenings and mornings to create that safe environment where sharing occurs.
Being on the road alone for that 22-hour round trip experience gave me the chance to simply think, and not do.  I was able to evaluate where I’ve been investing my time wisely and where I should consider making changes.   It was a healthy process, one that is more difficult when you’re caught up in the day-to-day affairs of making a living, doing your laundry, exercising and blending healthy smoothies.  Oh, don’t forget about having some fun!  
One key decision made on the trip is that I will do whatever possible to schedule regular visits with my family (luckily my younger son, his wife and their two kids live much closer to me). 
It’s good to take a solo journey every once in a while and rediscover who you are and what is important.
The emerging class 

A term that has become more and more popular in recent years is ‘emerging manager.’  Although making a convincing case is challenging, some pension funds have distinct allocations for this breed of investment manager.  Perhaps this is one of the key driving forces behind the appearance of so many lately.

The competition in this class is fierce and the patience required is saintly.  Over the years, as ‘potential’ emerging managers approached me and asked, “Steve, how long will it take for us to raise our first fund?” my answer had been, “If you’re not prepared to invest three years of time and money just to be invited to the dance, don’t start.”  While three years may be somewhat conservative, I’ve always qualifed my answer by adding, “It could take less time… You just never know.”

One thing is certain:  when an institutional investor or their consultant (or apparently my grandson Sean), looks ‘under the hood’ of your company, they’d better see what they’re looking for…a strong engine, plenty of battery power, a clean windshield and headlights that function.  If they don’t, it’s perfectly reasonable to assume that you will be told, “Come back when we can check all the boxes on our preliminary review form.  Oh, and also when you’ve gotten some of our peers to invest with you already….we don’t favor being the first investor in any new fund, particularly one with an emerging manager.”

But almost every institutional real estate investment manager emerged at some point.  And, with some very successful and talented niche real estate operating companies gaining traction, the lure of the pot of gold at the end of the rainbow is an enticement that cannot be ignored.  A word to the wise: remember the importance of the two ‘P’ words – patience and presentation.  These concepts are inextricably linked as you navigate the waters from being a ‘submerged’ to an emerged manager.

As has been proven, the rewards can be well worth the time, effort and expense.  Here’s to the current crop of courageous firms who have said, ‘Let’s go for it!’  There may be no better time than now!

Justin Laub joined Metropolitan Capital Advisors
Carrie Coulson joins Park Madison Partners

On the Road...
Sept. 15 – 17:  NAREIM (National Association of Real Estate Investment Managers), Executive Officers Fall Meeting, New York, NY

Oct. 10 – 11:  Cornell Real Estate Annual Conference, New York, NY

Oct. 23 – 24:  PERE (Private Equity Real Estate) Summit:  New York 2013, New York, NY

Oct. 28 – 30:  PREA (Pension Real Estate Association) Annual Investor Real Estate Conference, Chicago, IL

Nov. 13 -15:  NCREIF (National Council of Real Estate Investment Fiduciaries), Fall Meeting, Miami Beach, FL

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