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In this episode we welcome Brian Shirken. Brian is a Cofounding Partner at Mountain Pacific Opportunity Partners, and the founder of its precursor, Mountain Capital Partners. He also co-founded Columbus Pacific in 1995. Brian has been principally involved in millions of square feet of retail, over 10,000 student housing beds, development of over 3,000 multifamily units, and 5 assisted living projects. He has also provided more than $200 million in mezzanine and equity capital. Mountain Pacific, his current concern, focuses upon investing in QOZ projects across the West. Brian’s a talented entrepreneur with deep expertise in all things commercial real estate finance and development. He is a South African immigrant and a man after my own heart with a mountain residence in Los Angeles, CA and another in Park City, UT.
Key takeaways in the episode:
- In the beginning of your real estate career, you are not smart enough to get in your own away. That is a good thing. Action carries the day.
- It is all about the people. They capitalize developers. Yes, they can step in and take control if things fall apart, but to do so is a failure. Brian’s seen good deals with bad developers, and bad deals with bad developers, both are just bad. Trust and reliance on the partner’s ability to execute along our expectations is the core of what they do. They give up returns for great project, great area, and great developer. They never give up on the great developer.
- Mountain Pacific Opportunity Partners will bring the debt financing to the deal for a developer who is not credit worthy.
- Do not rely on momentary variance, underwrite to long term trends. Even in a COVID moment, they expect rent growth trends to return in 12 to 24-month timeframe.
- Lock in low financing as best you can, now, to reduce capital markets and interest rate risks., but always use appropriate leverage and hold through any cycle.
- We all need to beat the market.
- They have never been that concerned with developer co-invest. Fee subordination can work as a substitute.
- Stay small. Contract out commodity services and keep an agile, lower cost, team. Cyclical businesses and fixed overhead are a mismatch. They focus where we make money and let vendors and consultants make money on services because they have scale. Contract with those services, do not build them and take on the overhead.
- Passion – find what drives you and enjoy the work.