Dwight Angelini - Co-founder and Managing Partner at Longpoint Partners

0:07Dwight Angelini: Hi, I'm Josh and welcome to another episode of the LSE Focal Point podcast. Today we are delighted to be joined by Dwight Angelini. Dwight is the co-founder and managing partner of Long Point Partners, a Boston headquartered real estate private equity firm with more than$5 billion in assets under management. Prior to co-founding Longpoint in 2015, Dwight was a partner at TA Associates Realty. He began his career in quantitative finance at Goldman Sachs before moving into hedge fund management at Santander. Alongside Ranu Longpoint, Dwight is the Gloria A. Dawton Real Estate Fellow at Harvard Business School, where he teaches real estate investing and earned his MBA.

0:48Dwight Angelini: He holds a BA in psychology from Real University, where he was captain of the varsity soccer team. Dwight, thank you very much for taking the time. We are thrilled to have you on the podcast. Thank you, Josh. It's a pleasure to be here. Thank you. I'd start by saying it really pains me to say soccer team. Well, I'm originally from Argentina, so we'll keep that out of it because it'll pain you even more painful. You can say football. It's good. So I'd love to begin with your career journey. Psychology at Yale, Quants to Finance at Goldman, and hedge fund strategies at Santander, and then a shift into real estate.

1:26Dwight Angelini: Is that a conventional path into real estate PE? And I suppose at what point did you realize real estate was where you wanted to build your career? All right. Great question. So I'll take a little bit back. I'm originally, I was born in Los Angeles. We went back to Argentina and then back to Los Angeles when I was seven years old. And my father had been a professional soccer player in Argentina and my mother was a teacher. So I think already you're starting with not a traditional conventional path to anything at that point, especially because we really didn't have any money. As you fast forward, I think one of the great things about the late 90s was the analyst training program that places like Goldman.

2:12I graduated from Yale, which was a liberal arts education. I had taken the, you know, the prerequisite micro macro econ courses, econometrics courses and the like, but I didn't really know what I wanted to do. Except that everyone was moving to New York and I wanted to move to New York with all my, my friends. And so, so that's where you get recruited similar to LSE and ended up at Goldman. him. Ultimately, after five years in New York, I was ready to leave the city and ended up going to Harvard Business School. I really did not expect to go into real estate. I spent the summer at Deutsche Bank.

2:54Between the two years, I spent my summer at Deutsche Bank in New York at Wall Street structuring credit derivatives, all the stuff that blew up about six years later. But I met a professor, Professor Arthur Siegel, my first semester of my second year, and we just hit it off. And he thought that I should do real estate, even though I'd never bought a house or anything. At the same time, the year before, I'd met my future wife, who said, you know, you grow up in believing in unconditional love. Well, hers was conditional on living in Boston. And so between Arthur and Devin, my wife today, ended up staying in Boston.

3:39And the only job offer I got was TA Realty at the time. And I was there for 10 years and had a great run. It was not planned.

3:50Dwight Angelini: And how much of your real estate experience stems from your experience at Deutsche Structure and credit derivatives? I think whether it's real estate, if you're on the buy side, one of the thinks about going to the sales side, like an investment bank is what you really want to understand is the basics of financial underwriting, the basics of valuing something, a product, a stock, a building. And that skill set's pretty transferable. Now, understanding value within a certain sector, like an industry like real estate, and then getting deeper into industrial and then infill industrial and logistics industrial whatever it is that just takes time and energy but i think that the training that i received at all of those places helped facilitate my my earlier years in in real estate and moving through your earlier years towards the end of your tenure at ta yeah when did you feel it was the right time to leave and start or co-found your own firm was that with a view to doing things quite differently than at TA?

5:01Yeah. Right now, I teach a class at Harvard Business School. I'm noticing a lot of students want to start their own thing. Really, like entrepreneurial founder mentality is driving a lot of the kids today, and they're leaving. I think that can be the right thing, but it also can be limiting. And what I mean by that is going to TA for 10 years allowed me to be a big participant in an industry. We were the fifth largest owner of industrial assets in the United States. So we bought a lot, we sold a lot, we met a lot of brokers. It was really great training. The reality is I wasn't looking to leave and launch Long Point.

5:41I was doing great. I was a partner there. I sat on the management committee. It was a terrific place, but ultimately the company was sold to Mitsubishi Estate who are great partners, really really good organization but it's a big organization and i didn't see myself at a large financial enterprise so that's when me and three other partners left to launch long point one theme

6:08Dwight Angelini: i'm understanding from your career is things have seemingly crept up on you perhaps without that much preparation or am i doing you a disservice in terms of it was all strategic no it was i would say most of you know people plan too much and i think right now it's dangerous to plan too much i have a 16 year old and you know 17 year old he's going to be senior in high school and people are acting like he's supposed to know what he wants to do with the rest of his life and i think there's a lot of new pressure for kids today in college or in high school Most of the opportunities that have come to me have been, and I've been very fortunate and I'm very grateful for my situation, but it's also just kind of reading the room.

6:57Like this is the situation TA is going to change. What am I going to do if it changes? Am I just going to sit here and be an acquisitions person and be one of many, another number and a huge conglomerate? Or do I see an opportunity in the broader real estate world or industrial sector? Where maybe I can, you know, develop and build a company that takes advantage of that. So I think you always have to keep your eye out on what's out there. While at the same time, not being so rigid in your approach to, I think, life in general.

7:32Dwight Angelini: And do you think the extent to which you are malleable as opposed to rigid, how much of that stems from your upbringing? Wow, really good question. I think quite a bit. I think quite a bit. We moved to Argentina in 19, moved back to, I was born in 75. We moved back to Argentina in 76 because my parents had done well and they wanted, they thought Argentina was on the right track. We moved back seven years later because Argentina had completely imploded. So, yeah, probably quite a bit actually stems from my upbringing. I think actually at this point, it might be useful to take a step back and focus a little bit more on what Longpoint actually does.

8:17Dwight Angelini: Longpoint invests in infield industrial and logistics assets that are in more supply constrained markets, but also in grocery anchored neighborhood retail. Yes. For listeners, including myself, who may not be familiar with this space, how would you describe what Longpoint does today? Okay. So I surfed a lot when I was a kid growing up in Los Angeles. And what I would say, it's always better to ride a really nice wave than to be out there on a day that's choppy and there are no waves, even though you love being in the ocean. So this gets to thinking about people's passions. I hear a lot at school, like, follow your dreams and your passion.

9:03I would caution that advice. So when we left in 2015, you had to think about what had occurred for the last 40 years. Okay. And what's happening now makes sense. So if you were to study the supply chain, it tends to shift every 40 to 50 years. And starting in really the 70s and 80s, American companies started in opening up China. To you, China is like, it's a normal, but like for someone in their 50s, you saw the growth of China and the gutting of the manufacturing sector. in the U.S. So what that meant was that as goods were made in Asia, but consumed in Dallas, Texas, that movement of goods is what I study all the time.

9:53And so what we noticed in 2015 as, you know, Amazon and the digitization of the economy really was taking hold, like just again, perspective, Amazon was founded in 94. The version of Amazon we know today really got going in 2004. You know what I mean? It's pretty new, but it's changed a lot, right? So what we noticed at Longpoint was that the consumer basis in the U.S. were going to need a lot of functional warehouses closer to the consumer. So let's do that. So we bought a lot of smaller warehouses that needed to be fixed, repositioned, adaptive reuse in order to accommodate logistics uses. And those tenants could pay us a lot more in rent.

10:38So that's a long point. At the same time, you know, I'm from Argentina. My partner's from India. If you look at the middle class of the United States and its evolution over the last 40 years, it's become much more diverse, but also the traditional American consumer is also more diverse. So Jeremy, who I grew up with when I was seven years old, my first friend in this country, still my best friend. He was from Minnesota, white kid from Minnesota. Well, he's pretty well versed in Latin foods, right? And so they're more comfortable with more ethnic food exposures. And so how do you capture that purchasing power of that middle class community?

11:20And the way we did it is by buying grocery anchored shopping centers in middle-class areas where you had a change in the demographics. And so if you buy a building that hasn't changed along with the population it was serving, you could move rents and you can make a lot of money. And so those are the two ideas that launched Longpoint. And we continue that today. Fund one was$280 million of equity. Fund two,$660 million. Fund three,$940 million. We're in the process of raising our fourth fund. We've got 90 plus people, 11 offices. We operate out of 12 markets. And then we just launched a European operations.

12:03We have an office now in Germany and an office in the Netherlands.

12:08Dwight Angelini: That's absolutely fascinating. And so many questions from that. It of course seems like a very durable strategy. And as you touched on earlier with regard to Amazon, how quickly things are evolving. where do you see that opportunity set changing and and do you think that there's an opportunity that the market is really underestimating that you would seize so the buildings a lot of times don't change but the use case of the building changes and that's going to be a variable in terms of how much somebody could pay you in rent right and so you went through globalization over the last 40 years, and now we're in a situation where pretty much everything has to change, including in Europe.

12:52So you're going to regionalize supply chains. Manufacturing is reshoring or nearshoring. The AI infrastructure, CapEx spend is massive. that's happening. And all of this is being fueled by not cheap labor. That's always an input, trust me. But it's really fueled by robotics and AI. And then you have these other two forces, right, that have a large impact. And one is the U.S. consumer, which is, you know, hugely important to the world, but obviously to the U.S. And then the amount of supply that's come online. And so in the U.S., you have 44 markets that you could buy industrial assets in that are considered institutional.

13:41What you're going to find over the course of the next, well, you're already finding it now, but over the next five, 10 years, there's going to be massive divergence of return depending on location and then dependent on the use case of your building. So for example, let's say you have a rectangle building that has very little power. that sits in Chicago. Now let's say you have a rectangle building with very little power, but that sits in Miami. The return profile is going to be very different for the next five years. But now let's say you have a building that has a lot of power that's in Fort Worth.

14:22And now it's catering to a different type of tenant and different use case. So I think understanding those forces is going to lead you to certain markets, sub markets, and certain types of buildings. And it's going to produce outsized return in real estate in general, but definitively with the industrial sector. So it's gotten a lot harder, I think, to be a good investor.

14:51Dwight Angelini: And do you think that that thesis is universally applicable in terms of did that inform your approach to coming to Europe? as you mentioned, is that by applying a very similar thesis to that, which you just explained? Yeah. So we use a 17 factor model that allows us to analyze markets. You're basically looking for supply demand imbalances within industrial pockets. And then you're looking for those imbalances to stay for a while. And that's going to move rates. And so when you find those pockets, then you could go and build a thesis. And what I love about real estate is unlike a hedge fund or whatever, you can't just hit a bump.

15:33You have to go out and get someone to sell you a building, and it takes forever to buy a building. And then you have to operate the building. So you need construction people and electricians, and you need roofing people to restructure the building. And then you need to go find a tenant. What I love about it is everyone could end up with the same idea. Okay. But who's the best at executing that idea? And that's what makes real estate to me a lot of fun.

16:02Dwight Angelini: Yeah. In terms of your scaling of long points. Yeah. What has been the hardest part about scaling a firm at a pretty rapid pace? I think what's hard is the evolution of processes. I'm a very process oriented person. And so as you scale, the processes get harder or they get longer or the time gets lower or there's just more people involved in that process, which makes it harder to control. And so you have to just keep refining how you go about analyzing a market or building an office or hiring people to execute those strategies. To me, it's the refinement of processes without taking away the fun and entrepreneurship that is critical to being a successful real estate investor.

16:58Dwight Angelini: And in terms of fundraising, are you finding that with scale, you are starting to fundraise from a very different pool of investors? It's a great question. We don't have an IR department. Maybe we should because you're stuck with like me or one of the founders. What we have found is that our re-up rate into our funds is really, really high. So almost all of the investors are coming back to each fund. And it's because the returns have been very good. And so we haven't felt the need to go and fly all over the world and meet with the largest investors. We're very fortunate to have terrific investors, institutions, foundations, and endowments that will continue to follow us.

17:47But we're at$6 billion AUM now. Do you want to be$15 billion? Do you want to be$20 billion? Do you want to be$6 billion? I think to me, the answer really lies on what is the opportunity at the market with the strategy to make money. We're not going to all of a sudden go into data centers. We're not going to buy apartment buildings. We're not going to buy office buildings. We are a very skilled, experienced group at buying industrial warehouses in certain markets. We are a very skilled, experienced group at creating culturally relevant grocery and shopping centers in certain markets. And when you deviate too much from your core competency, what I have seen is the returns tend to suffer.

18:31And that's something that we won't allow.

18:34Dwight Angelini: I'm interested if you could deviate into a different strategy that interests you in particular, what would that be? I mean, I think the biggest right now is inference, computing, coming closer. There's just going to be a lot of technology that enables buildings that have power to be data centers or places for compute. And we're studying that right now. And again, it's just a different use case for our buildings. And that's happening at a very rapid scale when we talk to some of the hyperscalers. Everyone's like, AI is going to do this. You know, data centers are going to do that. How would you advise a student in this world?

19:23I don't think anybody really knows what's going to happen. I think this is a good moment, especially if I was a young person. and sort of like, what is likely to change based on what I know? And then what is likely to change within the industry that's causing that? What is the catalyst, right? And then go to those sectors. All these people building these massive data centers. You could do that. But what we're finding is we're having a lot of success with having industrial buildings with tenants that are catering to the build-out of the data center infrastructure. You don't always have to go and be in the game.

20:03Sometimes it's just good to be Gary Neville. Be a good right back. You know, you have a lot of success being Gary Neville.

20:11Dwight Angelini: Honestly, whoever said that no one grows up wants to be a Gary Neville?

20:17Dwight Angelini: That leads very nicely onto the advice for students segue. In terms of students who might specifically be interested in real estate investing and may not know where to start. What skills, habits, qualifications do you think matter most? Early on in your career when you graduate, you want to go to a place that's just going to provide you really good training and that they take mentorship very seriously. If you graduate from college or you're coming from Harvard Business School, as an employer, you're taking on the responsibility of someone's personal career development. to find a place that thinks that way, that can teach you the basic skills of valuing and underwriting real estate.

21:02That would be like the most important. And a place that does a lot of deals. I mean, they're not your deals, right? If they're good or bad, who cares? You'll learn from both, right? You just need to see a lot of deals. Ideally, you go to a place that does good deals so you can understand and become a better investor. But even if they're doing bad deals, you know, Tom Brady didn't just become a wonderful quarterback how many times did he throw that ball you know you have to get repped so i think especially out of like university is finding a place where you're going to get those

21:33Dwight Angelini: reps and if you could go back to the very start of your career which has certainly been a varied and fascinating one what advice would you give your younger self you go to these universities and they tell you you're amazing you guys are the future you're the future leaders you're the teacher politicians, this, that, and the other. And then you get out in the real world and you quickly realize nobody cares. Oh, maybe I love that great. And there's probably a lot of truth to that, right? And you have to go through this period where you might start feeling insecure in your path or where you are and you feel uncertain.

22:12You have the ability to kind of control your next step, your next move to build skill sets that'll make you more confident in what you're doing. I think you just have to be like very self-reflective. I had a father, my mother died when I was 20. And so my dad took on this role where he would be very good about telling me what I was doing right and what I was doing wrong. Because that's what my mother did for 20 years. Find someone like that in your life that can be just brutally honest.

22:46Dwight Angelini: Thank you, Dwight. That brings us to the end of this episode. Thank you to our listeners. If you enjoyed the conversation, please stay tuned for future interviews and follow LSE Focal Point on our platforms to keep up to date. Dwight, thank you again for joining us today. Thank you, Josh.