Commercial Real Estate Investing From A-Z 2nd Largest Office Holder in LA – How Did They Manage 1.5 Yrs of Lockdown?
How to manage a huge economic hit on your main asset class? How to buy and add value to properties today? Christopher Rising, co-founder of Rising Realty Partners, shares his expertise with us.
You can read this entire interview here: https://bit.ly/3GMTaaF
How did you deal with 1.5 yrs of lockdown (so far) when your main asset class is office in the Los Angeles area?
What did we do from day one was, we did try to work with our tenants. When someone came to us or someone chose not to pay the rent, the first thing we would say was, give us your financials, let’s be a partner here, and let us see. You kind of smoke some people out when you do that, because I can’t tell you how many law firms felt like a lease was a one sided obligation, and they didn’t have to pay if they didn’t want to. But that’s not true. We’d start with the, Hey, show us the books. Then we went to have you applied for a PPP loan, because those were specifically designed to pay salaries and to pay rent. And then if they didn’t do that, we said, have you gone to business insurance, but we knew that they weren’t fronting any of this. But if someone worked and tried to solve a problem, we worked with them. And in fact, I would say that every one of our retail tenants, our office building, I think to a tee, we are working out deals with them now, because most of them haven’t paid rent in two years, so that we can keep them, but they also need to do things like extend their term or something. We’re not trying to be punitive, and say, you owe us late rent. We’re just trying to almost close our eyes and pretend the last two years didn’t happen. We got through it. We paid our mortgages and all that. But in return, you have to give us a little more term on your leases. But it still hasn’t been figured out.
I think that on the multifamily side, there are a lot of problems that are hidden right now. Because you can’t evict people, all you can do is served with a notice to pay. And I think when all of this gets lifted, you’re going to see a lot of residential tenants whose credit gets really destroyed.
I would love to hear about your last acquisition, how did you analyze it find value add, and why did you end up purchasing it?
I’ll talk about the last one, which was in Las Vegas, we’ve taken our industrial strategy and really focused on something called multi-tenant light industrial. I think when people talk about industrial today, they sometimes forget, there’s different forms of industrial real estate, the one that is trading at unbelievably low cap rates are the big box, logistics based industrial buildings. You think of a big Amazon center or distribution center, or just anybody who’s moving product, those are trading at very low cap rates are very hard to buy, because you have to buy them in scale. You’re not really selling one offs, it’s usually portfolios. But people are really buying the cash flow stream and the quality of that credit. So that is not an area we have participated in, even though my father when he was in development, that’s what they did. We’ve taken a different approach and focused on this multi-tenant light industrial product that really isn’t getting built much anymore, especially in major CBDs. It’s not getting built, because it’s hard to get entitled, if you’re going to build something in industrial, you’d prefer to build the big box industrial, it costs less, you get more for your money.
The Real Market With Chris Rising
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