“In the garbage is often gold.” That was the main takeaway from Steve Rosenberg, founder and CEO of Greystone, in a discussion about the real estate capital markets with co-panelist David Lichtenstein, founder and CEO of The Lightstone Group, and moderated by Phil Rosen, retired Partner from law firm Weil, Gotshal, & Manges LLP at the 2nd Annual Yeshiva University Real Estate Day.
Discovering Opportunities
When asked about the undiscovered opportunities in challenging markets, Rosenberg pointed out that being creative and looking toward ideas that others may be “running away” from could prove to be fruitful. The duo noted that tough times are a strategic period for building up, and Lichtenstein commented that on his last trip to Israel, despite the ongoing conflict, he noticed construction cranes aplenty. “Perseverance is the name of the game,” he quipped.
On the topic of Israel, both Rosenberg and Lichtenstein shared their recent experiences with successful bond offerings on the Tel Aviv stock exchange. The bond offerings have proven to be in high demand. Greystone’s $160 million Series A bond offering was three times oversubscribed, illustrating the strong appetite for institutional investors to invest in high quality U.S. assets. The Lightstone Group recently completed an offering totaling over $275 million, with a similar and favorable response in the Israeli market.
Geographic Strategies
When asked what markets are hot for investment right now, Lichtenstein and Rosenberg both agreed that the U.S. property market provides plenty of opportunity. The Lightstone Group invests across 27 different states and asset classes including hospitality, industrial, retail, and residential.
“I don’t see why you would limit yourself to New York,” Rosenberg added for the NYC-based crowd, and shared how Greystone had become the largest rural affordable developer in the past by harnessing a USDA loan product that’s largely unknown.
The Psychology of Real Estate
Rosenberg’s perspective turned philosophical, noting that “today, psychology is more important than the math,” in reference to understanding the mind of sponsors as they face upcoming loan maturities. In this moment in time, lenders and advisors need to find solutions that can help solve new capital challenges that sponsors are facing.
Reflecting on a longtime friendship with Lichtenstein, Rosenberg said, “the secret to David’s success is his ability to think outside of the box, always sharing his time, and brainstorming,” and he reinforced that we need this type of thinking to persevere through challenging markets.
Other areas Greystone is running toward include affordable housing, including transitional housing, and being the solution provider for gaps where you may see lenders and borrowers at odds. Lichtenstein’s parting advice for the audience was simple: “seek areas where you can build generational wealth.”
Both speakers echoed over and over that opportunity lies in the places where others may not look, and Lichtenstein likened this strategy to fishing in shifting waters as opposed to the middle of a still pond. “When things are broken, that’s where there is the most opportunity,” he emphasized.