Meet the Panel + The Office Space Thesis: Buying $160M Buildings for $18.5M | Family Office Club

0:03Unnamed 25-Year PE Managing Partner: Let's just make it audience participation because this is the last panel and there's got to be stuff that you want to know, maybe things that you haven't heard about beforehand. So we're going to quickly run through the panel. Everybody is going to say who they are. Then, just to give a little bit of pre-warning to the panel, I'm just going to ask everybody to say the most interesting thing that they know. It could be about deal structure. It could be about their mom. It could be about anything at all, which will be helpful to you all here. If anybody in the middle of it has a question, throw up your hand right from the beginning, right?

0:36Unnamed 25-Year PE Managing Partner: If there's something you haven't heard over the two days and you're like, Brian, this is dumb. I need to know this. Throw up your hand and we're going to include you from the very beginning and we're going to start from there. So let's run down the panel. We're going to start with Dave and then we're going to work our way down. If everybody could just give 30 seconds who you are and that's it. Sure.

0:54Unnamed Second-Gen Family Office Investor: I basically built the U.S. Air Force's innovation arm. So, it used to be a pilot in the Air Force and then spun off several companies that help companies get government contracts. So, that led to our family office basically spawning several funds. So, we have a fund in Europe, a fund in the U.S. And so, we really like dual-use technology. We have a billion-dollar carve-out to Ford finance government contracts, and currently looking at energy data centers, mergers and acquisitions, that type of stuff. So we take a pretty unique look at how we look at technology and how we put together deals, and happy to talk about that with anybody.

1:33Unnamed 25-Year PE Managing Partner: Yeah, and I would say I've known Dave for a long time, one of the most genius people in venture capital, because he manipulates the ending before it starts. He has so many government contracts lined up that by the time he invests. So these types of deal structures I do want to touch on in a couple of seconds. Natalia.

1:48Unnamed First-Gen Family Office Founder: I'm second gen family office and a co-founder of Birda Family Office. Our main focus is safety and security technology, especially drone related. And also on a more personal side, I do a lot of programs inspiring women. I'm creating a true goddess brand. And I wrote a book, Unbreakable, The God of True, What the Fulfilled Life. Amazing.

2:12Unnamed Distressed Real Estate Fund Manager: I currently am founder and chief investment officer of Avelia Capital Partners. We're a newer fund and we acquire distressed hospitality. That fund was developed as a result of us independently acquiring a plethora of office buildings at about 10 and 20 percent over a couple of years ago. We've already increased those values over 100 percent, three times the amount. And so we were seeing the opportunity there with the newly debt maturity while here, and we're moving into the distressed office space. My background is in real estate. We have a team where we buy and invest in small balance real estate back in the Midwest.

2:57Unnamed Distressed Real Estate Fund Manager: We've transacted over 700 transactions in the past year, over 160. We have about 40 acquisition managers there, and we are now looking towards a future to add more than we are. We currently own a million square foot in office space, and we are increasing it actively to about 1.5 million square foot.

3:18Unnamed 25-Year PE Managing Partner: That's so fascinating. Tell me your insight on office space. Because like office space, I was talking to a guy who just bought like a huge office building, and he said, yeah, I just bought land encumbered by building. And so what is your thesis? because obviously we all look at office space. We know the prices have dropped by 60, 70, 80%. Like it's crazy what some have come down to. Some people try to turn them into residential, but then they struggle there. So we all know there's monster opportunity. But again, same as Dave, like how, what is your insight that's going to make you a stack of cash?

3:48Unnamed Distressed Real Estate Fund Manager: Okay, well, the difference with me is that I've been in a trenches. I started my career in Chicago, so we're used to these challenges. But being on the lending side is where I originated. We started seeing a trend of distressed office space, obviously once the interest rates increased. And then after COVID, everyone ran from the office and working from home, and we thought that was going to kill us. So a lot of the cities started coming up with opportunities for us to reposition those as residential. But for me, being on the development side, I knew that was pretty impossible because if anybody knows the issues with the windows.

4:31Unnamed Distressed Real Estate Fund Manager: At one point, they were great. They were going to be a thorn in your side if you look at that. Now, we do have a shortage of residential and a shortage of homes in those spaces. However, and they thought it was a great idea to reposition those. And for us, to me, I knew that was going to be a problem. So we saw an opportunity, and I'll give you an example. We have our first acquisition in Chicago a couple years ago. the building originally traded, it was 200 square foot, it was very small, 200 ,000 square foot office building. We acquired that originally traded for 25 million. We got it for two and a half million.

5:11Unnamed Distressed Real Estate Fund Manager: Right now we're putting in about, we've leased it back up, but we're going to put in another three and a half million and we've already have an exit strategy for about 20 million.

5:20Unnamed 25-Year PE Managing Partner: Beautiful.

5:21Unnamed Distressed Real Estate Fund Manager: We bought another office space at 390 ,000 square feet, downtown Chicago, So that originally was about$160 million deal there. We got that for$18.5 million.

5:36Unnamed 25-Year PE Managing Partner: Okay, so we get the idea. You get in real cheap, you get in under, and then you make the... Okay, we're going to come back to all this, okay?

5:42Unnamed Distressed Real Estate Fund Manager: Okay, so just let me finish real quick about that. Just my point to Offense Space, which is very important, is that don't look for it to rebound 100%. We just need it to rebound 50 % buying it at those prices. So that's just my advice.

5:56Unnamed 25-Year PE Managing Partner: Great insight. Chris, Chris Alley.

5:59Unnamed Second-Gen Family Office Investor: They're so impressive. You know, there's that story of the little boy who's like, that emperor is not wearing clothes. So I'm just trying to make sure I sound smart. My wife and I, we founded our own family office. So we're first gen. And we founded a company, Helix Mobile Wellness and Research. We do mobile hormone balancing. And that's really been the engine that drove us to do a family office. We're opening two new companies this month and next month. I invented a sleep supplement that makes five hours of sleep feel like eight hours. So if you don't have time to get eight hours of sleep, that's your supplement.

6:39Unnamed Second-Gen Family Office Investor: And then I have developed an algorithm that predicts what stocks are going to be going up two or three X in a matter of 12 months. That's going to be a paid subscription newsletter. And yeah, and we're having a great time. I'm honored to be here. Thank you. Brilliant. You're very welcome.

6:56Unnamed Former Air Force Pilot: So I'm a Gen 1. Most of my money and our family's money that we developed came from real estate. So I like real estate, a lot of different sectors. Had a nice exit in the storage world to extra space. So that was a wonderful day. In addition to my family, I'm a managing partner of a private equity firm, 25 year old firm out of Los Angeles down the street from here. We're a generalist by nature. Love to fly fish. If you, anyone liked to fly fish, Dutch John's great. And love to be on this panel so I can shake it up just a little bit.

7:29Unnamed 25-Year PE Managing Partner: Awesome. I like shaking it up.

7:31Unnamed Former Air Force Pilot: Join the family office club by visiting family offices.com. We look forward to seeing you at our next live event.

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