At the recent MBA’s CREF15 conference GRS Group’s representation included several of its top employees, among them CEO Charles Victor. We were lucky to catch Chuck during a break between his several meetings at the show. He discussed where the industry is headed, the headway GRS Group is making in Europe and the future of the firm. He says the company is “aggressively recruiting in all divisions,” especially GRS | Centaur, the firm’s advisory business, and GRS | Title.
What are your feelings on where the industry is going based on what you saw at the conference?
The industry has plenty of confidence right now. Generally, people are feeling pretty bullish. You can ask different sectors–and this is obviously a debt conference–but it does depend on whom you talk to. Based on what your angle is in this business, and how you come to it, some things matter and some things don’t.
For example, you’ll have a conduit guy at the conference telling you that the sky is the limit for CMBS right now—no problem. But then, I had dinner with a senior partner in a law firm that does almost nothing but special-servicing work. He told me that there is a big shortfall coming in the debt markets and the ability to refinance the maturity wave washing through over the next couple years. And if you really want to be smart, he added, you’ll stay close to the special servicers. For him, that’s the market right now. So it just depends on whom you talk to.
So there are inconsistent opinions?
There are inconsistent opinions about some of the challenges facing the market, but clearly everybody is generally bullish and feels that the market is in good shape.
And it seems as though other countries are looking to the United States and trying to figure out what we have done right while they are still struggling…
Aside from trying to discuss global economics and what the U.S. did or didn’t do correctly, the debt and equity flows in and out of the United States and Europe directly impact our business. If I’m going to try and understand what the next couple years looks like for our company, I spend a lot of time putting my head into what we think is going to happen to global CRE capital flows.
At the end of the day, that is what our business is predicated on. It’s all about transactions. We need buy-sell activity for our company to be successful. So I’m really excited about foreign capital flowing into the United States. It seems like a lot of it is coming from Asia and Canada, so that helps our overall domestic business. But what’s grabbing my attention right now—and was very big for us from 2005 to 2007, is capital flows out of the United States and into Europe. We are really seeing an up-tick on that—and I think it’s going to continue for the next three years. We have operations in Europe, and have experience there since 2004–whether it be for conduits or balance-sheet lenders or private-equity firms buying portfolios of properties or debt portfolios. Our people have been there and doing work for that long. So it’s exciting for me to see it coming back.
What excites you about Europe as opposed to different parts of the word?
Well, the US leads the world in how to run transparent real estate deals because we were the forerunners in attracting public capital markets into real estate investment through securitization and other means.
It’s all about gaining the trust of capital investors that are coming in, and that comes with transparency. At GRS Group, if we are nothing else, we are all about creating transparency on a transaction. Look at the list of services we have. Every one of them is about documenting transparency and mitigating risk in a real estate asset or a loan.
What excites me is to know we have a best practice company in the United States. And, when we are in Europe, we’re not going to do it the way a small regional German firm is going to do it. We’re going to do it the way we do in the United States. And with the United States being the global leader in transparency, if you were going to be a leader in European real estate capital markets, why would you not want to use GRS Group? That’s what excites me.
Is there anything, in particular, your customers or clients are saying that they need lately or in the next year?
The one thing that you hear over and over, that’s a pretty consistent message from our clients, is they want to stay leaner this time around. Whether it was the lenders or the big institutional equity shops—in 2008 and 2009 everybody got caught on such a high and had so much infrastructure. When the crash came, all of a sudden that infrastructure felt like a ball and chain. Then they had to dump all that personnel – it just cratered them.
This time around, what I see and hear is that investors and lenders want to be more efficient. Clients want to be more nimble. What they’re looking for is to augment their in-house team with consulting firms that can provide seasoned CRE veterans. The best firm, not the biggest firm. It’s not about scale this time — it’s about quality.
That’s why GRS Group is about being a boutique shop of veterans who still touch every single deal. We are a hands-on firm. We have brought together, under one roof, a collection of CRE experts to provide an array of transaction services. If you were a lender or equity investor that wanted to stay lean, how good is it to have one single consulting firm capable of delivering half-dozen or more of the services required to close your deal? Now that’s efficiency.
With our strategy, we have veteran transaction managers who could just as easily be employees at our clients, running their transactions and engaging all of the services needed to get a deal done. So what we’re doing is offering a solution to our clients without them needing to have a transaction manager in-house. GRS Group has all of the services and we manage them for free. They now have a choice. They can have a $100,000 transaction manager on staff that engages seven outside vendors to get a deal done. Or, they can hire GRS Group, and we’ll provide the transaction manager to run the deal and provide all of the services. That is working really well for our clients, and that is what they appreciate.
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