James Sprow | Blue Vault |
The third day of panel discussions and presentations at Blue Vault Bowman Alts Week 2020 brought out interesting perspectives on how the “new normal” will look both during and following the COVID-19 crisis. Every panel and every company presentation addressed the elephant in the room, the pandemic, and it became clear that there are different views, depending on the type of company, their business models, and in the case of asset managers, the types of assets in their portfolios. If there were two ideas that were shared by most presenters, they would be:
1) The pandemic has accelerated technological change within the commercial real estate industry generally and among Fintech companies and program sponsors alike.
2) The impacts of the pandemic are going to be felt for a relatively long time, perhaps longer than we would like to think.
The first panel entitled “When COVID-19 Settles – What Will the New Norm Look Like for Platform Providers, Product Sponsors, BDs, and RIAs?” featured moderator Jason Vaughn, SS&C Black Diamond, and panelists:
• Michael Huisman, UMB Bank
• Jeff LaFayette, Bluerock
• Chris Shaw, SS&C ALPS
• Amber Wallner, Black Creek Group
All of the panelists mentioned how quickly they had to adapt their offices to a remote working model. The fact that their teams are able to remain productive and engaged working from home highlights the role that new technologies have played in making remote working possible. All the panelists agreed that the new normal will probably see more working from home, even after the crisis is over. They’ve adapted quickly, even though their business continuity plans did not anticipate the possibility of a pandemic. They are hopeful that sales will rebound quickly. One innovation that every panelist mentioned was the “virtual happy hour.” Necessity truly is the mother of invention!
SS&C Black Diamond
Kyle Van Pelt presented for SS&C Black Diamond and discussed the Wealth Platform that gives clients a robust, transparent investment tool that mirrors the technology they use in everyday life. The platform includes portfolio management, rebalancing, powerful reporting firm/advisor dashboards, customizable views, custom-branded portals, billing, and extensive integrations with Fintech providers. One of the dashboard components available is from Riskalyze, the next presenter.
Riskalyze
Patrick Hannon of Riskalyze, walked through a demo of the Riskalyze product, a leading solution for evaluating client investor risk tolerance and matching portfolio models to meet the long-term goals of the client while conforming to their unique risk preferences. The Riskalyze tools are especially valuable in meeting the four components of the Reg. Best Interests requirements. It documents that the advisor has considered conflicts of interest, the care component with the risk profile, and full documentation of fees and expenses. At the firm level, the software provides a comprehensive view of every client’s investment objective and the risk targets assigned, showing how the firm is doing in aligning client risk preferences and investment choices.
Panel Discussion: “Brave New World: Thriving in a Mid- and Post-Pandemic Environment”
Tim Witt of Concorde Investment Services moderated a panel of:
• Brian Buehler, Triton Pacific
• Mike Ezzell, Inland Securities Corporation
• Corey Maple, Legendary Capital
• Warren Thomas, ExchangeRight
Tim asked, “What are the biggest challenges for the industry going forward?” Interestingly, both Tasty Brands at Triton Pacific and the ExchangeRight necessity-retail portfolios are not only surviving the crisis but have actually seen some upticks in sales. Corey Maple at Legendary Capital has a tougher road with the company’s hotels, but despite the huge cutback in employees, they are doing better than most in their industry by adapting, having lower leverage going into the crisis, and actually looking at opportunities to acquire deeply discounted assets in the space.
All the panelists agreed that technology has been a big factor in their coping with the crisis, and they are using it as a learning experience, seeing many opportunities for future investments.
CNB Custody
CNB Custody is partnering with firms across the industry to allow for the paperless flow of alternative investment documents. Their company prides itself on embracing new technologies while maintaining a customer-service oriented culture. In their presentation, they mentioned that their customers say their favorite thing about CNB Custody is “They answer the phone.” There are no long holds, no “Press 1 for….” and they get back to their customers right away with their team’s answer to the questions. They partner with many Fintech providers, including other presenters at the conference, including AIX and Docupace. They also keep their fees low!
Bluerock Real Estate
Josh Hoffman presented on behalf of Bluerock “Setting the Record Straight: Why Institutional Private Real Estate Works in Today’s Market” to the broker dealers and RIAs at the virtual conference. Bluerock has $8 billion AUM and 60,000+ investors across all products. Josh discussed the preferred stock offering of Bluerock Residential Growth REIT (BRG) with its 16,000+ Class A apartment units. BRG anticipates relatively low exposure to the impacts of COVID-19, focusing on locations with high concentrations of young, educated workforces. The REIT’s current offering of Series T Preferred is paying a 6.15% fully covered annualized dividend. Bluerock also sponsors Bluerock TI+ RE Fund, a closed-end interval fund.
Leitbox Storage Partners
The final presentation to BDs and RIAs for the day was by Bill Leitner, highlighting Leitbox Portfolio Partners II’s $50 million offering. Leitner gave the rationale for investments in self storage facilities, developed by his team. The demographic argument for self storage growth is based upon two trends: downsizing and urbanization. The self storage sector has outperformed other CRE sectors in both good economic times and bad. He addressed the COVID-19 crisis and how self storage assets are less vulnerable given the relative ease of social distancing at facilities, demand driven by businesses needing to reduce seating in restaurants and offices, hands-off leasing management via technology, and durable rent payments due to the “stickiness” of self storage tenants. Leitbox developments, typically in mixed-use configurations, are done with fewer subcontractors and reduced execution risk. Leitbox also uses “big data” to find ideal locations for its developments.
The day was wrapped up by a BD/RIA discussion led by Catherine Bowman and team, summarizing the key points made by participants during the day’s presentations.
