Interview: Telly Fathaly

For this weeks blog I interviewed Telly Fathaly, Vice President at Sterling Real Estate Capital.

1.) Hi Telly can you tell us a little about yourself and Sterling?

Thank you for this platform to communicate with your readers. Sterling Real Estate Capital, LLC is a Private Equity Advisory Firm that specializes in raising cash for Commercial Real Estate transactions. We serve as an intermediary between high net worth / institutional investors and operators / owners of Commercial Real Estate. Our team has an extensive industry background with principal, private equity, brokerage and Wall Street experience. We have a diversified and updated base of investment contacts and relationships that provide us with insight into the rapidly evolving attitudes and appetites of the Private Equity landscape.

2.) What opportunities currently exist in the commercial real estate space?

From our perspective the top opportunity we’re seeing is the ability for qualified operators to establish Programmatic JV partnerships with institutional investors outside the traditional fund construct. This is a departure from the last cycle where fund managers held more operating control over money being deployed by institutional groups. Whether we’re speaking about separate accounts, pledge funds or a more standard programmatic JV arrangement, the benefits to the operator can be significant. Most of the groups we work with are able to more effectively attract deals and concentrate on execution rather than scramble to raise money for individual opportunities. They’re able to jump out in front of problems and issues ahead of time, allowing for the benefit of playing offense in a market beginning to provide real opportunities for groups that are correctly capitalized.

3) How do commercial brokers work in cooperation with Sterling?

Commercial Brokers are an essential part of our success and it has always been important for us to incentivize client and deal referrals to facilitate continued relationships. Our reputation in this regard is outstanding and we can provide clarity as to broker participation very early in our process.

4) What is your "sweet-spot" of transactions?

Our “sweet spot” consists of a specific type of organization rather than a particular transaction. Our top clients and prospects all have one thing in common, an ability to grow and improve as the realties of our industry continue to manifest. We’re looking for the companies that have what it takes to survive and thrive and help provide them with the cash that will fuel their growth. There’s a window of change and opportunity opening for an undetermined period of time right now. The groups able to solve their problems and get organized will be able to step up to a new level over the next couple of years. We’re already seeing it happen.

5) What asset classes do you like in 2010?

Investors don’t seem to be as particularly focused on asset classes as much as they are on asset specific factors. We’ve seen two types of approaches emerge. The first is a more familiar return driven short-term play. This usually consists of solid real estate in A locations where some sort of circumstance has provided a chance to acquire at an attractive basis. The second is a renewed emphasis on more fundamental strategies of longer investment periods and increased attention to equity yield from cash flow. This is a departure from LP’s who were previously focused on value generation exclusively being quantified by IRR. Here the investors, mostly high net worth family offices, are buying cash flow at a discount and expecting a premium to account for the risks of Real Estate.

6) What are Institutional Investors Looking for from Operators in 2010?

Institutional Investors are looking for experienced operators with expertise in a specific product type and / or geographic area. Equity co-investment and “alignment of interests” has become a key consideration with debt capacity and ability to provide guarantees if necessary. Finally, operators should have a good network for originating off market transactions and provide investors with compelling and unique opportunities.

Please feel free to call or write with any questions or feedback.

Email: telly@sterlingrealestatecapital.com

Phone: (404) 995-1504.Sphere: Related Content