Win-win Partnerships with CRE Syndications with Keith Meyer

Keith Meyer is a well-intentioned commercial real estate operator and investor who has dabbled in a variety of investment vehicles. Over the last 25 years, Keith’s family and network of investors have owned and greatly boosted the value of several big manufactured housing communities. Keith oversees Symphony Capital Group’s (SCG) deal sourcing and acquisitions team, working directly with brokers and co-sponsors to acquire properties that fulfill his team’s strict standards. Keith focuses on forming win-win collaborations that are well-defined from the start and extremely effective once put in place.

Keith Meyer’s main areas of expertise include Global Supply Chain Management, SRM, and CRM; Operational Excellence and Lean Six Sigma waste and variation reduction; Project Management methodologies and; Commercial Real Estate deal sourcing, underwriting, operating, and dispositioning.

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Win-win Partnerships with CRE Syndications with Keith Meyer

Brett:

I’m super pumped about our next guest. He’s out of the great city of San Diego, arguably the best city in the world, California. He’s a purposeful commercial real estate operator and investor who has participated in a diverse set of investment vehicles within the industry. His family and network of investors have owned and significantly increased the worth of several large Manufactured Housing Communities over the past 25 years. He leads the deal sourcing and acquisition side of Symphony Capital Group and so much more. Please welcome to the show with me, Keith Meyer. How are you doing, Keith?

Keith:

I’m doing great, Brett. How about you?

Brett:

I’m doing very well. I’m excited to have you on the show. For our listeners getting to know you for the first time, would you give a little bit more about your story and your current focus?

Keith:

Absolutely. As you mentioned, currently lucky enough to be living out here in sunny San Diego, California, originally from the Midwest, so I spent about the first half of my life out there. Came up with an engineering background, so worked through the corporate structure. I’ve been transitioning more into full-time commercial real estate but using a lot of my engineering and analytical skills, obviously in vetting deals and getting into investments and ultimately, syndication operations over the last couple of years.

Brett:

Fantastic. By the way, if you guys want to learn more about Keith Meyer, you can go to symphonycapitalgroup.com. You’re from the great state of Ohio, Cincinnati just lost the Superbowl. Are you just like the buckeyes forever?

Keith:

I was a big bandwagon. Bengals fan this year, I’ve been waiting, I don’t know, 30 years for them to do anything of significance. But I actually went out to Kansas City for the AFC Championship game against the chiefs and saw it in person with my father. So that was pretty great. Got to double up and check on a recent apartment acquisition that we closed a couple of months back there as well. So that was a great trip. But I wasn’t too surprised by the Superbowl. I’m glad that they put up a good fight and had the lead there in the fourth quarter is definitely a fun season.

Brett:

For sure. That’s really cool. Well, let’s dive right into the topic at hand, which is Win-Win Partnerships and Commercial Real estate Syndications. So Keith, what’s the number one secret to creating Win-Win partners? Let’s start with the sponsors making sure that they’re aligned and leadership, and then we’ll move into the investor.

Keith:

I would say it’s being deliberate, yet flexible. I’ll clarify what I mean by that. But I think that’s where my team at Symphony Capital Group is really stood out is that we have a pretty structured approach for the most part where we’re able to move quickly with newer sponsors that are newer relationships for ourselves. We think about how complex and intricate putting together a successful acquisition or sponsorship team looks like from the deal sourcing, due diligence closing, and then ultimately, property operations aspect, as much as of that as you can have pre-planned, pre templated put up on rails, so that you can customize and configure on the fly to the extent needed is really critical. So we try to drive that process. I think that’s what really attracts us to a lot of our co-sponsors, is that we have the experience and are kind of at the forefront of being able to tailor those relationships to each unique property and deal structure.

Brett:

So talk about your value proposition to like the leadership team and the GP side. Then also, generally speaking, what are the one, two, or three roles that are involved in these GP deals for commercial real estate syndications?

Keith:

So a lot of folks kind of assume that we just jump in at the end on the capital raised side and fill in capital gaps on a deal that’s pretty far down the line. That’s really not what we’re into or what our approach is, we want to develop the relationship upfront even preferably before a deal even being pursued directly. So pre LOI phase, while deals are still listed, are still being analyzed. Part of that reason is that we really excel on the underwriting aspect, given the makeup of our team at Symphony Capital Group, so not only on the property level underwriting but also on the syndication and waterfall structure underwriting as well. So we do a really good job of staying on top of the markets that we pursue in terms of what all those different factors are when you get into rent growth and entry-exit. operates LTV with certain regional lenders, all that good stuff. Then ultimately reverse engineering. What a competitive return these look like to an investor, whether it’s an individual or a private equity group, and then reverse engineering what the rest of the returns and ultimate offer price needs look like in that regard. So I think based on our experience, we bring a lot of value to some local sponsors, and maybe don’t necessarily have that level of complexity into the prior deals that they’ve closed in a given market.

Brett:

Let’s talk about kind of the three a general ownership of a property, it’s a $10 million deal, keep it simple. It’s an apartment complex. I’ve heard General, one framework is a third for the capital raise, like who’s bringing in capital, a third for the general partnership, who’s running the entire all the deal, all the operations, all the financing, the sourcing, all of it, the business side of things? The third is like a key principle is that generally how you guys are structuring ownership and making things equitable?

Keith:

Yeah, those are some of the larger buckets, we go a little bit more granular than that. I think that’s the thing that’s helped us stand out is that we really have the truth based on our experience of actually doing it, the true key roles and responsibilities mapped out at a more detailed level. But for the most part, you’re going to be looking at on the acquisition side, compensating for the person that found the deal or fostered the deal to even get to the LOI, or best and final phase, PSA phase. Then you’re going to need to structure your Kp loan guarantor, the person who’s putting up at-risk capital, like earnest money, or inspection fees, things like that, and compensate them accordingly. Then thinking down the road, you need to have a carve-out for who’s going to be doing the asset management on the GP side. So typically, that’s the person or persons who are overseeing the local property management team and making sure that the business plan is being executed towards making sure that the CAPEX budget for renovations is being managed and not overrun, that type of thing. Then another component that we throw in is syndication and investor management. So making sure that you’re staying in regular communications with your investors, keeping them updated on the execution of the business plan, answering any questions that come in, and then managing that process as well. That’s something that gets overlooked because folks are so focused on the acquisition and deal sourcing side these days that sometimes they don’t think far enough down the road, but that’s something that we focus on.

Brett:

Makes sense. So which, which do you feel like is the role that’s maybe most overlooked or maybe not as appreciated as much or maybe not as is compensated? Typically, is any advice thereon putting into commercial estate syndication together?

Keith:

Probably would be that back end, the combination of investor and asset management. So it’s tough to find deals at Council these days, I think there’s a really high emphasis on that, at present, the actual capital portion there’s a good amount of emphasis, but there’s a lot of money out there chasing deals. So probably, the ability to act quickly is more critical on the capital portion, than even the dollar number at this point. So if that’s going to be a focal area for your team, I’d say that’s a way to stand out is to have that really teed up and enabled feel that quickly under the tight closing timeframes that we’re all operating within these days. But for the most part, it’s going to be your syndication, investor management’s managing distributions to investors, capital accounts, all that stuff. Then, all the complexities that go into asset business plan execution.

Brett:

So the beginning you mentioned being deliberate that flexible, So imagine you might be getting into some deals where you have these agreements with GPs or sponsors, the deal, then you get in the deal, and not to anyone’s fault, but like this ended up being so much more of an undertaking or this person into being more valuable. So when you say flexible, do you mean you may be changing some of the percentages on who’s getting compensated for what know what that looks like?

Keith:

That’s very true. So you want to come in a pretty firm in terms of here’s what the full pie looks like, basically, of what needs to be done. Then you have an idea for what each group’s specialty is entering a deal and maybe a group drops out and gets replaced by somebody else in your network. So you need to reconfigure that a little bit as things progressed through due diligence and closing. But typically you have a good, pretty tight range of what those percentages and V splits are going to look like. But it’s really not locked down until pretty close towards closing for the most part.

Brett:

Makes sense. You can learn more about Keith Meyer on symphonycapitalgroup.com. By the way, we’re talking about investors here and how that all connects as well. But I think everything rises and falls on leadership. So to the extent that your leaders are aligned financially and in values wise, and on the same page, and also being deliberate and planned but also being flexible, and in realizing that deals can change a bit and things can come up. Having that in place is the foundation for good places to invest. So that being said, let’s dive into how we make it a win-win for investors. So what are you guys doing to try to make it attractive from an investor standpoint? What’s the difference with Symphony Capital Group.

Keith:

We really stay on top of what competitive market returns are. Returns can become complicated when you look at how an investor wants to be compensated overtime. I know we’re generally underwriting to a five-year timeframe. So if you have a couple of dozen investors in a given deal, there’s going to be a couple of different preferences in terms of how that’s ultimately compensated. So as much optionality as you can introduce in that case is generally benefited. So we typically offer something like a preferred return, whether that’s a completely separate class that maybe only receives the preferred return because they’re more interested in that quasi guaranteed predictable coupon payout rate versus somebody that’s not looking to make any real cash flow for the first couple years is a value add plant gets executed, but they’re looking for a high ultimate return upon refinance or disposition of the asset. So being able to cater to both of those investor types is something that we certainly focus on. My team at Symphony is known as one of the leaders at the forefront of all this tokenization and blockchain for real estate energy that you’ve heard in the last couple of years. I actually spoke at the blockchain real estate conference in Austin, back in September. That’s something that we’re really putting a lot of time and energy into is being able to incorporate that into future deals of having even more liquidity and optionality for our investors in terms of what they’re able to do with their percentage of ownership within our deals in our deal structures.

Brett:

Excellent. Let’s talk about that. Because we’re really heavy on focus on crypto right now and how it correlates or how it translates from moving out of crypto tax-deferred into real estate deals, passive or actively, we think that’s the number one opportunity for those who are highly appreciated cryptos to get into motion, cash flowing, producing assets, get too much appreciation, but do it in a tax-efficient way. So talk about what you guys are doing with it with the tokenization in the blockchain. I’m curious what you mean by that and what that looks like going forward?

Keith:

So there are a few misnomers that we generally try to clear up on front upfront when you talk. Blockchain versus cryptocurrency versus crypto assets. So real estate as it would be tokenized, or is currently being tokenized is really a crypto asset. It’s something that is a taxable event when it’s sold or transferred. It’s something that’s an unlimited supply. So by definition, that really is an asset versus a currency that’s being exchanged on forex or something like that. So with that in mind, what blockchain does is you get a lot of benefits on the smart contracts and contract execution. That’s probably too long of a topic for these sakes. But that’s definitely a big driver and reason why syndicators and investors are interested in gaining those efficiencies. But what ultimately does is show proof of ownership at a very fractional and very secure level. So there’s the reason that the minimum investment in a lot of larger multifamily syndications is 50,000. Now kind of $100,000 is the minimum and a lot of deals. It’s because of the amount of effort administration that goes into taking on each individual investor and managing all those contracts and portals and distributions and things like that. So if you’re able to have ownership through what’s called an STO, Securitized Token Offering fractionalized, much like Bitcoin is or any other crypto asset or cryptocurrency, then you’re able to have a lot of that proof of ownership, automated and all the associated voting rights and cash distributions automated as well. So that’s really where the leaps and bounds of technology that we’ve seen over the last five years or so it’s come into play to introduce those efficiencies.

Brett:

Phenomenal. That’s really fascinating. I want to talk about crypto and maybe connect the dots here for everybody who is looking to exit. We did a couple of deals here recently, Keith where we helped one client in particular. She bought Bitcoin for 30 to 50,000, and then it went to $50 million. So she had a huge tax liability and she exited 5 million into the trust. She partnered with the trust to start a business venture. Those business ventures can be real estate. Hers happens to be a tech business startup. But just talking about that frustration, maybe even for you as a syndicator, where people want to come to you with capital, but they got to come post-tax, They got to pay all this 30% to 50% tax before they show up. What’s been your biggest frustration when it comes to people that you want to exit crypto or exit any other assets, and they have a lot of tax?

Keith:

So as syndicators we’d love to take 1031 exchange money all day long it’s generally larger cheque sizes, and it’s folks that are really motivated to get their capital into the replacement assets. But it becomes complicated when you get into all the IRS regulations, as far as what’s considered a like-kind exchange and the exchange timeframes as well, with 45 days for identification, then 160 days to execute the replacement. So it’s really hard to get all those factors to align when it’s already complicated enough to just close on the asset itself. So that we are also pioneering as well as on the front of being able to facilitate those both on the entry and on the exit, because we want to cater to those types of investors and take advantage of the tax deferral methods that are out there. So you’ve probably been approached with investors that are proposing things like ticks 10 in common, the DSTs, some of the ways to kind of group together investors or pull investors into deals through tax-deferred capital. That’s something that’s pretty complicated to structure. But fortunately, it’s becoming more common to where there are more demonstrated success stories in that regard. It’s becoming a little bit more standardized what that approach is, and I think that’s something that again, being able to introduce some of this fractionalization through Securitized Token Offerings will help as well, just because a lot of the proof of ownership and it’s just a lot more trackable and granular so just more data available in that regard.

Brett:

Awesome. I like to share that we call it the shotgun wedding, You got engaged in 45 days. You gotta get married and 180. Sometimes not a lot of time, not a lot of time, a lot of pressure there. Then sometimes you want to like diversify. You don’t want to necessarily put all your eggs in just one deal, you might put a little bit in some liquid, investments, stocks, bonds, mutual funds, crypto, some of its passive deals something an active, but you don’t have to take it all on destroying your shoulders, or just the timings not right. That’s where the Deferred Sales Trust is amazing. We call it the Netflix to the blockbuster 1031. That you can sell high buy low diversify. It does take some getting used to. That’s part of what we provide with our services. You can go to capitalgainstaxsolutions.com. You can hear all about how we do that. That being said, we’re running out of time. Are you ready for the lightning round?

Keith:

Absolutely. Let’s do it.

Brett:

All right, knowing what you know now, if you go back to your 25-year-old self, what’s the one golden nugget make sure to tell yourself to do?

Keith:

Don’t be afraid to reach out and ask for help and ask for referrals. People in this industry are super helpful. That’s one of the things I’m drawn towards. So if you’re looking for something specific, be very aggressive in asking for help, and somebody is going to step up and help you.

Brett:

Fantastic. Second question, what’s the number one book you’ve recommended or gifted the most in the past year?

Keith:

Two that come to mind, Best in Class by Kyle Mitchell and Gary Lipsky, a great operational book on asset management. I also love Raising Capital For Real Estate by Hunter Thompson. More on the capital management, capital stack, investor management side, and marketing side as well. Both really helpful.

Brett:

Fantastic. Question number three, what are you most curious about right now?

Keith:

I think it probably is that blockchain and tokenization aspect, that’s something that could really revolutionize the industry, and already is on a smaller level. So we really want to stay at the forefront, because it’s a win-win situation that benefits both operators and investors alike.

Brett:

Excellent. What’s the number one leadership quote or theme that you strive to live by?

Keith:

Do unto others as you would have them do unto you. Again, that ties into the title of this segment that we’re talking about here, Creating Win-Win Partnerships. That’s another thing that I love about Commercial Real Estate, there’s enough meat on the bone for everybody to win and have really symbiotic relationships. So that’s something that we place a lot of emphasis on upfront and make sure that we’re managing as we start to build relationships.

Brett:

Awesome. The last question is, after all, your success in helping people create and preserve more wealth, all the things you’ve done with commercial real estate, multifamily investing, and now moving into the blockchain type of future tokenization of real estate. How do you stay centered in your values and how do you stay encouraged to charge forward to reach new heights?

Keith:

It’s leaning on my close partners. So we keep each other motivated. We operate through the EOS – Entrepreneurial Operating System. So that holds us accountable for what our goals are making sure that we’re looking at short-term month to month, quarter to quarter goals. But then also building and staying focused on that 135-year vision as well. Making sure that all the weeks that we grind that we’re going through is really tying together to the ultimate vision.

Brett:

Fantastic. Keith, for our listeners who want to get to know you, or connect with even more, where can they find you?

Keith:

So, we’re symphonycapitalgroup.com. We’re all over social media. Our Instagram, Facebook, LinkedIn, YouTube channels are pretty easy to find. If you’d like to reach out to me directly, keith@symphonycapitalgroup.com is my email.

Brett:

Awesome. Thanks for being on the show. Thanks for sharing your story and sharing your wisdom.