Andrew Jobst: Knowledge, Intelligence & Curiosity — The Secrets Behind a Boutique LP Equity Provider.

Episode 6 of Offshoot brings long-time friend and acquaintance, Andrew Jobst onto the show.  Andrew is a principal of HG Capital.

Since 1995, HG Capital has specialized in providing joint venture equity for value-add and opportunistic real estate investments throughout the Western US. Uniquely, they typically invest $8MM and less per transaction.  That stance reflects a very deliberate and strategic effort to place equity into a portion of the market with less buying pressure. That notion to “buy where others are not” has proven very successful over the firm’s 25-year history.

Andrew is unquestionably one of the most intelligent and highly educated people I engage with on a recurring basis. He is involved in all aspects of the Fund’s operations including originations, joint venture negotiations, and asset management & disposition.  Since joining the company in 1997, he has structured over 100 investments with completed value of more than $2 billion.  He’s insatiably curious, very thoughtful, and both possesses and seeks knowledge from a very wide array of subjects.  Interestingly, his formal education was not a traditional foundation for a career in real estate as he holds a B.S. in Biology, a B.A. in Economics, and a Master’s Degree in Engineering Economic Systems and Operations Research, all from Stanford University.

Within the episode we touch on a wide array of topics, including:

  • The wall of capital that is in the market and the implications for the real estate market.
  • The fact that capital is not on the sidelines because of the COIVD-19 pandemic.
  • The idea that there is no real estate market, but only a basket of discreet deals that the media likes to call the market.  Deals are all case-by-case.
  • The space that HG plays within and why those smaller equity checks, and their smaller platform represent a vibrant strategy.
  • COVID-19 as a “grand natural experiment” that has catalyzed and accelerated a wide array of changes.
  • Incentives as a central tenet of any partnership and the difference maker in structuring deals for the best outcomes and creating alignment.
  • “Greener Grass Syndrome” and the tendency for operators to drift into the space of other competitors who may know more than they do, who are just as sharp, and work just as hard as them.  Why will they be more successful than the incumbents, and what makes them see that grass as so green?
  • Asking the developer or investor why do you like this deal, now?
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