Weaver: “The biggest challenge I see in the real estate sector is its inherent cyclical nature.”
IRVINE, CA—Being able to identify when pricing and market fundamentals become disjointed, causing another down cycle, is one of the major challenges the commercial real estate industry faces, the Bendetti Co.’s CFO Aaron Weaver tells GlobeSt.com. After recently joining the firm in this new role, Weaver spoke with us exclusively about his goals there and challenges he’s seeing in the finance sector and in the commercial real estate industry in general.
GlobeSt.com: What are your goals in your new role at the Bendetti Co.?
Weaver: My primary goal is to expand the platform so that more investors may invest with the Bendetti Co. I am currently working with Bob Bendetti, president of the company since the mid-’80s, to create an investment fund to provide high-net-worth individuals an avenue by which they can invest in commercial real estate through an established company. Some of my other goals have been to enhance the company’s accounting and investor-relations function as well as forge new debt and equity relationships and nurture our current longstanding relationships to help facilitate future deal structures.
GlobeSt.com: What challenges does the real estate finance sector currently face?
Weaver: The biggest challenge I see in the real estate sector is its inherent cyclical nature. From 2002 to 2007, we saw underwriting get more aggressive to win deals, debt financing become more available and market fundamentals begin to show signs of weakness. From 2008 to 2012, we saw the challenges that arise in the down cycle, specifically the increase in vacancy. The Great Recession shed light on the importance of aligning yourself with strong operators who employ prudent, disciplined strategies no matter where the market is in the cycle. Commercial real estate has benefited from an improving economy and strengthening market fundamentals. We are starting to see pricing reach peak levels in some markets, but still see good buying opportunities in the years to come. I believe one big challenge the industry will face in the future is being able to identify when pricing and market fundamentals become disjointed, causing another down cycle.
GlobeSt.com: Where are there untapped opportunities in real estate finance?
Weaver: From an equity standpoint, we are seeing the “Main Street” investor profile increase as there are fewer restrictions for a sponsor to advertise and solicit an investment offering, thanks to the JOBS Act of 2012. Being able to reach this broad investor base more freely has and will create more opportunities for real estate sponsors to raise capital. We are also seeing institutional investors increase allocations for real estate. This is not necessarily an untapped source of capital, but I believe institutions will continue to increase real estate allocations, causing real estate capital inflows to continue to grow in the next several years.
GlobeSt.com: What should investors and capital providers know about your firm?
Weaver: The Bendetti Co. has a solid 50-plus-year track record of acquiring and developing industrial real estate. We invest in value-add, multi-tenant industrial real estate in solid markets within the Western states that institutional investors would likely have no interest in acquiring due to age, condition and effort needed to re-position and ultimately manage. We have been competing in this space since the mid-’60s. We have been involved in various deal structures with both private investors and institutional joint-venture partners and value our long-term relationships with these groups. We are also excited for this next chapter since Bendetti will be giving outside high-net-worth investors a chance to invest with a reputable, longstanding company by creating our first fund. Details of the fund will be forthcoming; we anticipate the launch date to be mid-summer.