Lorne Polger, co-founder and Senior Managing Director of Pathfinder Partners joins me on this episode.
I’m happy to say that these conversations are starting to feel more natural, and I hope you enjoy our exchange.
After more than 20 years practicing real estate and environmental law at Procopio, in San Diego, and just before The Great Recession began, Lorne and his partner Mitch Siegler had the vision and guts to leap into the operator role.
Pathfinder is a vertically integrated real estate company whose funds deploy investor capital directly into Pathfinder’s projects, avoiding the double promotes associated with traditional equity funds. They play on the value-add and opportunistic side of the risk spectrum and tend to pursue smaller transactions than the largest real estate funds, though by no means are the deals small.
The firm is raising their 11th fund and has gone full cycle on about 100 assets and has acquired about 135 deals. Their funds target secondary markets in the western states of California, Arizona, Colorado, Washington, Oregon, and Nevada.
Lorne and the Pathfinder team are super sharp. As market conditions have changed over the last 14 years, they have re-direct the platform from distressed deals to value-add deals to pursue attractive returns. Once they set an investment thesis, they bring a high degree of discipline and topflight execution to bear.
Prior to earning a law degree from UCLA, Lorne graduated from Colorado College with a degree in Political Science.
Lorne’s got an incredibly deep experience base and a generous spirit. Hopefully, you can enjoy some key takeaways from the episode:
- Relationships in commercial real estate (as in all business) are central.
- Choose investment markets wisely. Look to job growth, diversity of job sectors, general market trends (tailwinds not headwinds).
- Colorado and Arizona look more favorable (at the moment) than Oregon and California where the political environment (rent control, uncertain property taxes) might suggest more patience and a wait-and-see attitude.
- Rely on principals to guide you, for example:
- Create alignment between investors and operator.
- Invest in your people (they offer equity to the team).
- Be transparent, do not hide or soften bad news.
- Act for investors as you would for yourself.
- Good buying opportunities are coming:
- 2021 will see hotel owners capitulate.
- Adaptive reuse for hotel to apartment should be viable.
- Buying at less than 100 cents on the dollar with ultra-cheap debt, for multi-family, will likely show up.
- This is a good time to be picky. Quality markets, assets, and deal structures.
- NODs (Notice of Default) and bankruptcies are just starting to tick up in the markets that Pathfinder Partners operates within. More will follow.
- Build an advisory board. They will challenge your assumptions, create accountability, and expand the vision. Their ability to be part of the team may be all the incentive that they need.
- Two tips for success: Work your passion. Be focused.
Where to Find Lorne Polger
Pathfinder Partners: https://www.pathfinderfunds.com/