Sound Strategies from Citymark Capital

By: Terry Troy

Source:  Cleveland Magazine Community Leader

August 2020

When Dan Walsh, founder and CEO of Citymark Capital, started his real estate investment company five years ago, the company’s focus and direction were unique, but he felt it would be attractive to investors.

The strategy focuses on investing in market rate, institutional quality, multifamily rental properties where Citymark would  invest to make improvements, work with operating partners to collect rents, and then eventually sell the improved properties with the goal of returning a profit for the investors.

However, even back then, there was still one question that seemed to be on every investor’s lip:  “What if there is an economic downturn?”

“And I always answered that people will always need a place to live and will have to pay their rent, so we believe this will continue to generate cash flow to properties,” says Walsh. “Then, when the market improves, we can sell those properties with the goal of making a profit.”

Back then, Walsh didn’t realize that his answer would be so prescient, especially given the current economic downturn.

Citymark’s vision to be a leading global real estate investment platform and mission to serve its investors through prudent selection and management of multifamily real estate investments across the U.S. has proven to be a recipe for business success during the last five years. Today, Citymark has raised more than $200 million of capital and reviewed more than $13 billion of potential investments since its inception.

However, the question on initial investors’ lips five years ago is even more salient today. So, how has the coronavirus and the economic downturn it spawned impacted Citymark’s business?

When it comes to the company’s core values and basic business strategy, there has been very little impact to date, says Walsh.

“When I was preparing for our annual Investor’s Summit in June, I went back to look at my notes from our first summit in 2017,” Walsh says. “I found that none of our messages had changed. We still have the same investment strategy, and we believe it is still a very effective strategy.

“We are still seeing deal flow. It did go down in the second half of March and then in April,” Walsh admits. “But in May, it started to pick back up. In an average year, we’ll see about $5 billion of opportunities. We ended up seeing almost $400 million in May, so we’re pretty close to being back to normal.”

So is there any need to rethink strategies moving forward?

“We’re very focused on the strategy we use, and we believe it has been successful in meeting our objectives,” says Walsh. “We are continuing to see opportunities nationally, and the demographics support the need for rental housing. So we are staying the course.”

But staying the course also means weathering a storm. While its business strategy and operating principles are sound, Citymark has made some obvious changes to its operations because of the pandemic.

“We have been remote since March 13, and we still are for the time being,” says Walsh. “We’re taking it day-by-day in terms of how long we will be remote.

“We still meet every day by Zoom,” Walsh adds. “Our business is conducive to being able to operate remotely. We’ll continue to operate remotely until it’s safe for our employees to come back. The safety of our employees and associates is our chief concern.”

The same is true of Citymark’s investment partners and community. Instead of holding its annual Investors Summit at a hotel or some other physical venue, in June, it was hosted through Zoom. However, it still attracted some 180 current investors, potential investors and friends of the firm.

It hasn’t been totally smooth sailing, says Walsh, and there have been a few concerns.

“We have put a focus on rent collections because we realize that no property is totally immune from the impact of the coronavirus, and anybody can run into a problem, especially in these uncertain economic times,” says Walsh. “However, it has not proven to be a problem to date, thanks to the great work of our operating partners nationwide.”

But it’s not all about business or collecting rents. Indeed, Citymark along with its operating partners nationwide, have been involved with food drives to help those in need.

“Not only have our operating partners organized food drives, our residents also have also jumped in and helped their communities in their time of need,” says Walsh. “Citymark has also made contributions in these efforts, which is consistent with one of our core values, which is community.”

Walsh does admit that if companies continue to operate remotely, it could impact the future commercial real estate market.

 

This article is a reprint from an independent third-party, and Citymark cannot guarantee or ensure the accuracy of the information provided. This is not an offer or solicitation. The general information discussed is not a guarantee, prediction, or projection of future performance. There are risks associated with investing in real estate assets, such as inflation, interest rates, real estate tax rates, changes in the general economic climate, local conditions such as population trends and neighborhood values, and supply and demand for similar property types. Investing in real estate does carry the risk of loss to your investment.

The article may contain forward-looking statements identified by the use of words such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive.