A Family Office Perspective On Real Estate Investing, With Alex Bhathal

Every family office is unique, with its own distinct strengths and investment philosophy. While most family offices share a long term time horizon, the perspective of each can differ greatly.

Alex Bhathal, founder and executive chairman at Revitate and co-owner of the Sacramento Kings, joins the show to discuss how his unique experiences in the operating business world have shaped the philosophy of his own family office, as well as that of the Revitate investment platform.

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Episode Highlights

  • Background on Alex’s involvement in running a family office, and how that led to the creation of the Revitate investment platform.
  • A unique perspective on investment in a professional sports franchise (and how the economics shifted to make the professional sports sector more profitable for investors).
  • How Alex’s co-ownership of the Sacramento Kings led to his early investment in the Opportunity Zones space.
  • A surprising perspective on real estate opportunities in the Midwest.
  • Details on Revitate’s current private placement offerings for accredited investors.

Today’s Guest: Alex Bhathal, Revitate

About The Alternative Investment Podcast

The Alternative Investment Podcast is a leading voice in the alternatives industry, covering private equity, venture capital, and real estate. Host Andy Hagans interviews asset managers, family offices, and industry thought leaders, as they discuss the most effective strategies to grow generational wealth.

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Show Transcript

Andy: Welcome to the “Alternative Investment Podcast.” I’m your host Andy Hagans. And today we’re talking about Family Offices And A Family Office Perspective On Real Estate Investing which I think is a really interesting topic. We’ve had a lot of guests lately from the family office world. And joining me today is Alex Bhathal, who is founder and executive chairman at Revitate.

Alex, welcome to the show.

Alex: Thanks, Andy. Great to see you and thanks for having me.

Andy: So let’s start then at the beginning. And so in our listenership, I mean, we have some professionals who work for family offices or principals at family offices. And we also have a lot of, you know, high net worth investors who are just interested in the world of family offices, and, you know, how they think, how they invest. So could you tell us a little bit about your history and work experience with family offices?

Alex: Sure. So by way of background, I come from a family that’s been in business for a few generations out here in the Newport Beach area so Southern California. Family has always been in real estate, real estate development. And then in the 1960s, my parents started an apparel company, which thankfully has been a successful enterprise over the decades.

It’s actually still around today after 55 years. And it was from those two efforts the real estate side and the consumer products side in the apparel industry that we were able to form the family office. The roots of that were born by… After business school, I came and joined the family business in the apparel industry.

My parents were retiring and my sister was working there. And I joined it not to take over the family business to be there forever, but really to help scale the company to grow it and be able to exit. And we were successful in being able to do that. We took the company digital, we took it global, and sold it to Swander Pace Capital and Goldman Sachs private equity, back a number of years ago, and that was a great experience.

I stayed on board for a number of years running the company on behalf of the board before transitioning out to oversee our family investment office called RAJ Capital. So that was the big event in my life to ultimately pursue what was my long-term plan of being on the investment side of the house within our family enterprises.

And a big event happened in 2013 when our family acquired the Sacramento Kings basketball team as part of the Vivek Ranadive Group. So through that experience, we did a lot of real estate development. And through the ownership group built the new Golden 1 Center in downtown Sacramento, and the district around it, called DOCO.

So that was a very successful urban redevelopment. And it took me further down the path of real estate, real estate development, and real estate management as the core of what I do. And really prompted the establishment of Revitate as our investment platform owned by the family office to seek other investments in areas that the family has experience.

Andy: I see. Wow. So there’s a lot there to unpack. Well, let me start with the exit of the apparel business because I’ve reviewed Revitate and, you know, some of the different funds and investments you’re involved in. I don’t think I saw apparel there but maybe I was in the consumer side.

Are you still involved in clothing and apparel at all or is that not an area of focus anymore?

Alex: It’s not a core area of focus although we are invested in some apparel companies. We do focus on consumer products. The three areas of interest for investment activities of Revitate, are centered around like I mentioned areas that we know best being real estate, the sports business, and consumer brands.

Within the consumer side, I serve as senior operating partner at Rx3 which is a consumer growth fund founded by Aaron Rodgers, Nate Raabe, and Byron Roth. And within that portfolio, we have exposure to one apparel company, Mack Weldon.

But that’s not necessarily the main thrust of our investment activities today.

Andy: Okay. Understood. So that’s really interesting. You were involved in this operating business, you helped scale it, helped manage the exit. Sounds like that was a successful outcome for everyone. And then you were attracted to that investment side and ran the family office or are still running the family office, I should say.

So, you know, what’s it like running a family office? What’s it like going from being involved in the operations of a scaled out, you know, global company, eCommerce and all that, to what is really, you know, even though family office, you know, manages generally a large amount of capital, it’s many fewer relationships I would think, you know, or is it?

Is it a total professional change or is it more of the same in a different context?

Alex: Managing a family office is really whatever you want it to be. To your point, it’s focused on investing and allocating capital the right way. But how you do that is really in the eye of the beholder. I did come from operations and running a company day-to-day and you kind of have a steady drip of stress in your life being in operations and managing the day-to-day activities of the business.

Investing is different. Investing, you have peaks and valleys. There’s times when you’re working on a deal, and it’s late nights and a lot of things have to come together to get to the other side of the successful outcome. But then there’s also the downside when you do have more time to think and strategize and plan.

And that’s been interesting, it’s been rewarding, it’s been something that I’m appreciative that I have the opportunity to do nowadays. But at the same time, you know, being an operator at heart and understanding how businesses run, and function, and grow, and scale, it does bring you back there as having that understanding.

And that’s kind of what we’ve done with Revitate is by building out this investment management platform, I’ve wound up back again at a different scale, but into the day-to-day grind of operating business with people, and deadlines, and projects. And, you know, more than the deal stress that comes with investments.

Andy: Sure. So let’s talk about Revitate then. So Revitate is essentially it’s building on the success of your family office. Is it scaling the investments and bringing some of them to retail investors or, you know, who is Revitate?

What is Revitate?

Alex: Thanks, Andy. That’s a great question. What Revitate is, it’s an investment management platform owned by the family office to accelerate investments in the areas that we know best, real estate, consumer, and sports. And to do that, its roots really were in the opportunity zone space. We’re coming off of the successful development in Sacramento and the passage of the opportunity zone legislation at the end of 2017, it became a natural transition to take the lessons learned from the Sacramento redevelopment and apply it to other up-and-coming markets across the country utilizing this new tax incentive around opportunity zones.

And because that tax incentive was very strong and compelling, and interesting, especially for family offices that we had relationships and friendships with, we were tasked with allocating capital on behalf of people other than ourselves. So through that vehicle, and those vehicles, it was the first time that we took outside capital and happy to report that’s been a very successful vertical for us.

As general partner and principal, and founder we’ve allocated across 4 funds into 14 opportunity zone developments, over $1.4 billion of projects around the country in historically lower-income areas. So that became the basis of a plan to build out other offerings and other investment vehicles for investors who wanted to have access to the types of stuff, types of opportunities that we were pursuing in the real estate world as well as in sports and consumer.

Andy: That’s really interesting. And you know, it’s a trend. I’ve had a couple of guests on the show lately and it’s like a recurring trend that I’ve been hearing a lot lately, which is a family office either single family office or a multifamily office is having some success, you know, deploying capital into direct investments.

And then they end up scaling it into either a multifamily office or a platform for accredited investors. And I’m kind of curious why that happens. Do you think it’s more, you know, that the folks running the family office are good at allocating capital and good executors, so it just makes sense to scale with more capital?

Or, you know, I also see another trend which is family offices they’re not really competitive, like, it’s not like a competitive world. Like a lot of other industries, you know, everything is like a competition. You see a lot more sharing of information and collaboration I think in the family office world, as well as just co-investing to manage risk and to, you know, share.

So what do you think the trends are that are driving that?

Alex: Well, I think you touched on several of them. I can speak to our experiences. And first, it was designed around this opportunity zone program where we wanted to make investments into the opportunity zone space because we believed in the core mission of the program to help revitalize underprivileged communities through capitalism, through private investments.

And had that experience in what we did up in Sacramento. And in order to do it the right way, and in order to scale the business correctly, we wanted to be able to do it at scale, and bring in professionals to help us, and build out a platform. And that meant the interest from investors and the economics that come through being general partners in a fund allowed us to create an infrastructure that on our own, we may not have been able to create and be dedicated specialists in an area.

Andy: So… I’m sorry to interrupt. So that’s really a function of like economy of scale asset under management type thing. Because I’m thinking okay, unless you’re like a sovereign wealth fund or something, even a large family office isn’t going to have as much scale as several family offices pooling their money together, or several family offices here plus other accredited investors.

Is that just really you have to reach a certain scale to do these types of projects efficiently?

Alex: Especially in real estate, real estate is a very capital-intensive business. So certainly, we could have not done any of that and just invested off the family balance sheet into that stuff we found interesting or compelling, or done some lazy investing. But in order to build it…our goal was never just be principal investors only it was to build a business.

It’s led by principal investment and principal involvement and the balance sheet and the working capital to create a business unit that then because of outside capital, becomes a sum greater than its parts.

Where we can be experts in a field and be leaders in a field, attract talent, and be able to leverage skill sets across the platform, and leverage resources across the platform to be better investors than we would otherwise be if we were just doing it on our own. And as well as relationships and deal flow, and all those things that are required in order to be a good investor, you have to be active in the markets and be known in the markets.

And if you’re just a single-family office, it’s hard to get the attention.

Andy: And, you know, another theme I’ve heard, and this is really more in the professional side of family offices is sometimes there will be a liquidity event or an exit of like a family business. And so there’ll be a lot of that upfront work in like the first couple of years and allocating that, you know, initial capital from a liquidity event.

And then it’s like, well, now what? You know, hopefully, that capital is returning capital and income so there’s things to reinvest. But I think also, especially a lot of principals and self-managed family offices, entrepreneurial people, you know, they don’t want to sit on their hands and just, you know, watch investments perform.

Even perform well, you know, it’s just creative people want to build things.

Alex: And that’s exactly… I’m older than I once was, but that was…as we were establishing everything that was a big thought in my head was I just don’t want to be sitting in front of a computer screen watching stocks go up and down for the rest of my life. So building a business, creating a platform, tying together all of the family interests, and being able to leverage them and scale them.

And I will say too, and I haven’t touched on in-depth yet, is I do all of this with my sister. She’s my general partner and…co-managing partner in all of our funds and all of our activities. And serves as our chief impact officer. And everything that we do at Revitate, is focused on making sure that the investments that we’re making and the product lines and investment lines that we’re pursuing are rooted in delivering on positive social and economic impact.

And it’s really an evolution of the family’s philanthropic activities, where the family has always been philanthropic through the years and through the decades. And now we realize there’s more ways to do good than just writing checks to charity, we certainly do that. But by focusing in areas and investment opportunities where you can see real impact in communities, it doesn’t have to be impact investing where it’s concessionary.

Just by making good investment decisions that also have economic and social impact results. That’s something that really kind of ties a bow on our activities as a firm and unites the values of the family, the mission of the family alongside our fiduciary responsibilities for the capital, and on behalf of our investors.

Andy: You know, that’s really interesting point. And I think we’re going to get to opportunity zones later in the interview. But it’s an interesting point that, you know, you can be a fiduciary, you can make good investments, , especially with opportunity zones investments can be very profitable. And it’s not either/or they can also be very good for a community or for an area of the country that, you know, needs investment.

I mean, especially some of these funds that are building multifamily housing or just other really needed, you know, infrastructure, it just isn’t an either/or. And that’s a really interesting comment you made it’s not just about writing a check that you can actually align your investments and your business activities with your values. So let’s talk briefly because I want to get to real estate, but I have to ask about the fact that you’re a co-owner of the Sacramento Kings.

I think this is so interesting. But let me ask first, how did you get involved with owning a professional sports franchise? Was that something that your family was seeking or did you just kind of, you know, happen into it? How does that happen?

Alex: There’s various lengths and versions of that story, but I’ll try to…I’ll be brief. Our family has always had a passion for sports in general and the business of sports. My mom played golf in Tennessee, UCLA. I grew up playing all different sports focusing on football at the end. And my dad loved it.

My dad is originally from India. So he came here for college when he was 17 years old, and fell in love with American culture. And part of American culture and pursuing the American dream was a love of sports. So that’s something that has really bound the family together. And dating back to the early 1990s the NFL was seeking to expand internationally.

And they formed what was called then the World League of American Football and became known as NFL Europe. And my father through some connections got involved with that and became the original owner of one of the teams in the world league, and had a great time.

So I was young then but it was something that I know my parents they loved the experience. My dad got to sit on a couple of NFL boards. And it was just one of those memories in life that he…regardless of the financial success or not success, they wound up doing okay on it.

But it wasn’t some massive home run, but he just loved it. It was the best investment he ever made in terms of emotional ROI.

Andy: Well, that was actually something I was going to ask about because at least from…and maybe that’s changing. But from what I’ve read in theory, the returns on owning a professional sports franchise, at least in terms of like yield or free cash flow, are not that profitable. But on the other hand, I’m thinking well, the brand equity or the book value of those franchises, those brands is probably astronomical and probably grows.

So, you know, are sports franchises a good investment on financial terms, or is it partially an emotional yield or a lifestyle yield?

Alex: I think it used to be the former and then things started to change. And really that’s what brought us back into the business of sports is probably about 10 or 12, 13 years ago, we saw things starting to change. Like the NFL, they’ve always been very, very successful. The NBA we saw as potential to really grow, especially because with basketball, you could take it international, we knew the media rights were being bid up.

There were a lot of fundamental…the demographics were better. We knew there was a lot of fundamental value that was about to be unlocked in the business of sports and in the NBA, in particular. So over the course of a few years, we looked at a few different opportunities. And then ultimately long story short joined the Sacramento Kings as principal co-owners.

And it’s been a phenomenal run, we’ve had a great time being part of the redevelopment of downtown Sacramento and being part of the growth of the NBA on a global scale. And I think to your point on what does it look like from an investment perspective, most teams and most leagues now unless there is dynamic factors such as they’re like really going for a championship or they’re really poorly run teams in…

Andy: Unless they’re the Cleveland Browns, basically.

Alex: No comment. But they should be run on a cashflow positive basis. And then you get the benefit of the appreciation over the long term, which the NBA at least knowledgeable about those numbers, I think it’s about a 15% compounded annual growth rate for the league over the last decade or so.

So if you can grow like that and have a cashflow positive business and do something that has tremendous emotional ROI, then why not? Why not? I think that’s one of the reasons why the evaluations have exploded is there’s limited number of these franchises in the best sports and tremendous demand and limited supply with all these very attractive macro factors coming into the space.

Andy: Absolutely. And I think you hit the nail on the head there when you used the word unlocking. I mean, it brings to mind… So Jimmy and I, my sometimes co-host on this show, we both went to Notre Dame and I forget the exact stat. And this was probably…well, this was over 10 years ago, but it was something like the book value of the brand name is probably like a billion dollars or something and that’s really because of sports.

And I mean, that’s a university, it’s run as a not-for-profit. But if you can have positive cash flow, and think about that kind of growth and brand equity, that these sports leagues build I mean, I can see the incredible potential there. So that’s really interesting to hear that the dynamics have shifted. So the Sacramento Kings and you mentioned that there was real estate development in downtown Sacramento.

So how much is real estate involved with owning, you know, the sports franchise? Is that a big component of the investment or financial picture?

Alex: It can be. It really depends on the team. I think how we view it is for us, it was very important. When you look at the evolution just kind of going back to this earlier point of how the business of sports has evolved. It used to be…franchise was a lifestyle investment for a wealthy local business leader, and they played in a municipal stadium.

And they drove their revenues off the gate receipts and the media rights and hopefully made a little money at the end of the day. But it was a lifestyle business and it was a seasonal business. And they got their… Their main business was typically…their main moneymakers were typically elsewhere. It evolved where team owners saw the opportunity to build their own stadiums or control the economics on stadiums or arenas.

And then when they had a permanent place, to be able to develop the adjacent real estate. Many examples of that whether it’s LA Live in downtown LA, or what we’ve done up in Sacramento all across the country, stadium districts and arena districts have proven a really viable model for sports owners.

And now we’re seeing a whole new wave of expanding these platforms that have this tremendous emotional connection with the local population. And you’re able to take that emotional connection and leverage it into new business opportunities, whether it’s in technology or eGaming, or cryptocurrencies and NFTs.

There’s all sorts of new business ideas within the business of sports that are proving to be very valuable and very viable.

Andy: That’s interesting. Yeah, they all come from the brand, that franchise, the connection to the local community. Let’s shift gears a little bit. So we’ve talked about real estate a little bit, but it sounds like you really got your start in real estate from managing the family office. So could you talk a little bit about that and your investment philosophy with real estate?

Alex: Sure. So dating back to the family roots I mentioned the family’s always been in real estate and real estate development. My parents took the profits from the apparel business back when I was little and what they would do with it is buy land and then develop projects over time. So I got experience really working within the family structure on developments that we were doing in the Southwest, in California, Arizona, and Nevada, prior to business school.

And then as I mentioned, after business school, I went into the operations of the apparel company. Since the Sacramento experience then it’s really helped us professionalize our investment activities and do so in a way that we can scale them. And it’s been through the building of our investment management platform that I mentioned.

So by having outside capital join us in our investment activities, we’ve been able to attract really talented high-caliber investment professionals and have focused on two strategies to date One has been the opportunity zones that we mentioned, where we’re allocating capital to developers for mostly multifamily and some industrial and other asset types in emerging secondary markets around the country.

So up-and-coming cities that have benefited from the shift in growth, in businesses, and populations as the whole country kind of shook up post-COVID. And then our other strategy is focused on acquiring workforce housing in the Midwest, which has been a bit overlooked in terms of the huge amounts of institutional capital that’s gone into the Sun Belt because of attractive demographics and regulatory climate and population trends.

But we see a lot of interesting things happening in the Midwest, especially in the I-70 Corridor, closer to where you went to school out in Indiana in South Bend. We actually just closed on a multifamily project in South Bend about a month ago. And we see Kansas City, and Louisville, and Indianapolis, Columbus, those markets as been very viable alternatives to the Chicagos of the world.

And a lot of people moving into those areas and very stable, steady growing workforce and employment base. And we’re really lucky to have…I mentioned attracting high-quality talent. We have Chris Marsh leading that strategy.

He was a 20-year veteran of the Irvine Company, 10 years as president of the multifamily division overseeing 65,000 units on behalf of the company, the third largest multifamily portfolio in the country as measured by revenue. So he left there about a year ago and joined us in a partnership to acquire multifamily in the Midwest.

Andy: So that’s really interesting the strategy on the Midwest. And you’re absolutely right, you know, there’s been so much focus on the Sun Belt. And anytime a trade gets that crowded, you know, it always makes me a little nervous. By the way, I am an LP in a multifamily fund that invests heavily in the Sun Belt.

So I also, you know, I believe in that larger demographic trend. But one thing that you said was really interesting to me. So you were talking about that I-70 corridor. And, you know, I’m in the Midwest, I’m in Michigan. I grew up in Columbus, Ohio, went to school in Indiana, lived in Chicago. I’ve been all over the Midwest.

Seems to me that the I-70 corridor…people are probably going to laugh at this. But it almost sounds to me like you describe like the Sun Belt of the Midwest. And I know, there’s no such thing as the Sun Belt of the Midwest, you know. But the areas that you mentioned, seem to be a little more business-friendly, regulatory climate, a little bit warmer weather. I mean, do you kind of look at the Midwest, like it almost seems like the Midwest is like, too big of a word to describe, you know, the specific areas that you’re investing in that you’ve located which are really more specific in that.

Because like when I compare Indiana to Illinois, it’s almost from a legal perspective, regulatory perspective it’s like two different worlds.

Alex: Absolutely. And we view that I-70 corridor as having…there’s probably seven or eight target markets within that triangle.

Andy: Could you use that by the way the Sun Belt of the Midwest maybe that could go in your marketing material.

Alex: Snow belt of the Midwest, how’s that?

Andy: Go on. So there’s seven or eight…sorry, I interrupted. Seven or eight MSAs.

Alex: So we see seven or eight really attractive markets that do have very conducive regulatory environments and pro-business environments that have successfully attracted businesses and population that have relocated whether it’s within the Midwest, or from externally.

And we think that trend is here to stay. A lot of people used to…after graduating from their big 10 school they would rush to Chicago, and that would be their first center of employment, first jobs, and where a lot of businesses were. And Chicago is still a great city, but it’s becoming…the Midwest is becoming more fragmented.

And you do see Moines Iowa and Indianapolis and Kansas City is becoming alternative technology communities where there’s a lot of money coming in from technology companies establishing themselves in those marketplaces, and being able to successfully recruit and attract talent that maybe 10, 20 years ago, wouldn’t have thought of Kansas City or some of these other cities as being a place that they wanted to go to establish their careers.

But that’s changed and there’s a lot of really interesting dynamic things happening that we don’t see slowing down in those markets.

Andy: That’s a really interesting point and I think I agree. You know, traveling all over the Midwest, which I do there are places, you know, in Columbus, for instance, just as a, for instance, I wouldn’t bet against that city. Actually, when I grew up there we used to joke it was like a cow town.

And now when I go back it’s like it’s a mini Chicago it’s not a cow town. And I wouldn’t bet against that market either, you know, with the industry and the university there. So another thing about the fund…and I’ll make sure to link to this fund in our show notes, the Revitate Cherry Tree Multifamily Fund.

But it mentions that you have a target purchase price range of that 10 to $40 million plus target range. Can you talk a little bit about that range? Is the floor of like a $10 million asset is that just to get scale in terms of, you know, operating it and adding value?

Or are there other reasons that you like assets in this sort of sweet spot?

Alex: Yeah, it’s a great question. And really what we’re looking to do and what we are successfully executing is creating portfolios, doing it the hard way. Buying one-off property, multifamily properties, workforce housing, from typically regional owners, some mom-and-pop owners, and oftentimes, they may not be as institutionally managed as our team led by Chris.

And he has a group of mostly former Irvine Company professionals who have the skill sets, the experience, the technical skills to go in and through operational value-add improve the results by focusing on less to lease when the rental turnover happens. And not necessarily taking a lot of risk on physical value-add by changing around the properties.

We’re mostly focused on preserving the workforce housing that exists so that normal middle-class Americans or lower middle-class Americans who work in warehouses, work in factories, maybe have starting out white-collar jobs have viable affordable options without going into government assistance.

These are [inaudible] housings they’re just inherently affordable because of the price points which we’re able to deliver these assets to the marketplace.

Andy: Sounds like this is the housing that, you know, we desperately need to be built but also operated in the United States and a variety of…

Alex: And preserve.

Andy: Yeah, and preserve. That’s interesting. So you’re not gentrifying here and it’s also interesting. So when it’s value-add the value add is really more on the operation side rather than on the sticks and bricks, or new appliances or something like that.

Alex: Exactly. We’ll still improve the units as they turn over and make the necessary investments into the property. But it’s really not with the intent to fix up the property such that you can jack up the rents and push in a new cohort of renters.

We’re there really focused on retention and making sure that these physical assets are here to stay so that people who need this type of living and want this type of living, have it in an affordable manner.

Andy: Understood. And you mentioned, you know, building a portfolio the old-fashioned way. I love that, you know, phrase and I totally get it. I wanted to ask, though, is the idea to build that portfolio just for the benefit of the fund to own and operate it within the fund? Or I’m also sort of thinking like is there a strategy there of, you know, like a roll-up where you build it up to a certain size where the portfolio would be attractive to like an institutional buyer?

I guess, what’s the thought with the portfolio strategy?

Alex: It’s either of those. We plan on owning these for our fund life. And by aggregating a portfolio and putting together several thousand units in a few key markets, then it does inherently become much more interesting towards the large Wall Street funds, the big institutional funds that want to be in these markets, but they’re not going to do it the hard way of plucking off one and twosie apartments, but they’ll be very aggressive and historically have been on buying portfolios.

Andy: So what’s that scale like? What’s a legit portfolio like with that type of buyers? Is it a quarter billion? A half billion? Is it a billion?

Alex: You know, our goals are to build out 10,000 units in this I-70 Corridor over a number of years so across a few different funds. And within each market, I mentioned there’s kind of 78 priority markets within our acquisitions team’s views. But we’ll wind up with three to four markets where we’ll build out the bulk of our portfolios and have several thousand units in each of those.

Andy: Okay, wow. Okay. So I want to shift now to talk about OZ funds. And I think this is interesting that, you know, you personally and your group was an early mover in opportunity zone fund. So, you saw the potential early along with my partner, Jimmy Atkinson, you know, there’s…not a lot of people really that in those very early days kind of got it right away, but also were willing to, you know, put their own skin in the game.

So, talk about, you know, how did you see that I guess opportunity right away? Why were you more comfortable with it, you know? Why were you able to be ahead of the curve and get comfortable with it more quickly than a lot of other players in the real estate world?

Alex: I think it was a product of the Sacramento experience, having just completed this billion-dollar redevelopment in the downtown core of Sacramento, the Kings ownership group. And seeing the real impact that it can have not just for ownership, but importantly, for the city and the community.

It was something that was really inspiring. And something that you think you only got a one-time shot in life to be able to do something as meaningful as that. And then right on the back of that development, there was this new program. So it was upon reading about it and learning about it very early on I think it was back in February of ’18. So right after the law was passed, got up to speed and learned what this program’s intentions were and kind of dove in.

I mean, it really was something that when I saw it and thought about it, it seems very much relevant to the experience and the passions and the interests that I personally had. And we got involved in policy at the beginning because to your point at the very beginning, nobody knew what the heck was happening and how the regulations were going to roll out.

So we got into contact with the Treasury Department and through some connections in the Senate and started just learning. And we were able to provide some input from an industry practitioner standpoint on how the regulations would roll out, and as soon as we could we started investing.

And that’s been something that’s been very fulfilling is being early and being a leader in the space.

Andy: And so I know now Revitate has the Revitate Impact OZ fund and that’s open for investors right now as I understand it for accredited investors. Could you talk a little bit about that fund and what it’s specifically investing in?

Alex: Sure. So Revitate impact is really focused on an evolution of our work in opportunity zones previously, where we’re targeting emerging secondary markets across the country. So we’re investing nationally. A lot of it is driven from market research on where businesses and people are moving and where there’s inherent supply-demand imbalances.

A lot of people are moving to these up-and-coming markets and some of them are overheated, but not all of them are. And there’s certainly places across the country where there’s really strong underlying demographic and business growth, and haven’t built the supply to accommodate that. So we’re focused in those areas.

Andy: Is this multifamily or industrial or is it anything?

Alex: By asset class, we’re mostly multifamily. We’ve invested I think 80% of our equity to date has gone into multifamily. Although we have invested in pretty much all asset classes. We will be targeting multifamily and industrial with the new fund vehicle. And we partner with best-in-class local developers to build mostly multifamily in up-and-coming parts of up-and-coming cities.

So our deal sizes are mid-cap so call it $50 million, $250 million projects. Not so big that it’s these big mega deals that big Wall Street funds like to do in big gateway markets, but also bigger than what developers typically can syndicate on their own. So we…

Andy: Well, Alex this sounds like a pretty big fund because to diversify nationally and the sweet spot is 50 to $150 million mid-market to be diversified and have that project size. I mean, this sounds like frankly a massive OZ fund.

Alex: We’re mid-size so we’re at $200 million dollar cap. The deals being 50 to 150 means that there’s two-thirds of the deal…

Andy: Oh, the equity component is lower. I see. But still, you know, those are pretty good-sized deals to have one fund given investor exposure to different sectors in different geographic areas.

Alex: That’s right. Our goal is to be geographically diversified, have some asset class diversification, and have approximately 10 projects that we’ll be allocating capital to.

Andy: That’s not easy. Honestly, I’ve looked through OZ funds. I’m an LP in a couple of different opportunity zone funds. There aren’t that many, you know, truly diversified funds so it’s not an easy trick to pull off. Do you have any predictions on the opportunity zones program Alex, do you think it’s going to be extended?

Do you think it’ll be renewed? Do you think it’ll be made permanent?

Alex: It’s hard to predict. That being said, I will say, first of all, a lot of the low-lying fruit has been picked. We’re now at a point I think to your earlier statement, where you have to search a little harder to find the good deals and to be able to accomplish those diversification goals that you mentioned.

We’re not in an environment where everybody can just…every time they can hear, you can find a bunch of great OZ deals. Now, you do need to be a specialist. In terms of how the industry goes from here, there is legislation as you’re probably aware to extend the bill and make some reforms to it.

That’s going to require an act of Congress so who knows what happens? We’re optimistic that something can get done this year and we’ve been involved in the process and we are very supportive of the bipartisan legislation that’s in front of Congress right now.

Andy: Absolutely. Well, I’m optimistic that it will be extended. But Alex, really good conversations today. I mean, I appreciate, you know, just that family office perspective and that you’ve been involved in a lot of different industries as an operator. But then also now on the investment side and, you know, been, you know, an early adopter or a thought leader with opportunity zones.

I think it’s really great that Revitate is bringing that offering to accredited investors and allowing others to invest alongside you on that platform. So on that note, where can our listeners and viewers go to learn more about Revitate and your offerings that you have for accredited investors?

Alex: Our best resource is our website at revitate.co.

Andy: Okay. And I’ll be sure to link that as well as some of the other things we discussed on our show notes page. So you can always go to altsdb.com/podcast, to access our show notes. And I’d be remiss if I didn’t take a moment to just recognize our production team, Scott and Courtney, they’ve been doing a great job making me look and sound better than I deserve.

And I also want to remind our listeners and viewers, don’t forget to subscribe to us to make sure that you receive our new episodes as we release them. Alex, thanks so much for joining the show today.

Alex: Great. Thanks so much, Andy. Enjoyed it.

Andy Hagans
Andy Hagans

Andy Hagans is co-founder and CEO at AltsDb, and host of The Alternative Investment Podcast. He resides in Michigan.