Today’s Guest is Andrew Lofredo.
Andrew is the CEO of CRE Vertical Advisors. He leverages his extensive experience in commercial real estate to provide private investors and family offices with a tailored investment and services platform. Join Sam and Andrew in today’s episode.
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The Background and Experience [00:00:44]
Services Provided to Family Offices [00:02:15]
Approach to Investing [00:09:34]
Longer-term focus [00:10:52]
Challenges in today’s market [00:11:43]
Managing disciplines and objectives [00:14:32]
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Connect with Andrew:
Personal Linkedin: https://www.linkedin.com/in/andrewlofredo/
CRE Vertical Advisors Linkedin: https://www.linkedin.com/company/cre-vertical/
Twitter: https://twitter.com/AndrewVLofredo
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234
Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f
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Want to read the full show notes of the episode? Check it out below:
Andrew Lofredo([00:00:00]) – But it’s really about managing all of those disciplines. And, you know, our approach is, you know, the way we the way we say it is first, let’s define what our objectives are, but then manage all of those disciplines to achieve those objectives.
Sam Wilson ([00:00:16]) – Welcome to the How to Scale Commercial Real Estate show. Whether you are an active or passive investor, we’ll teach you how to scale your real estate investing business into something big. Andrew Loredo is the CEO of CRE Vertical Advisors. He leverages his extensive experience in commercial real estate to provide private investors and family offices with a tailored investment and services platform. Andrew, welcome to the show.
Andrew Lofredo([00:00:42]) – Thank you. Thanks. Thanks for having me.
Sam Wilson ([00:00:44]) – Absolutely. The pleasure is mine. Andrew There are three questions I ask every guest who comes on the show in 90s or less. Can you tell me where did you start? Where are you now and how did you get there?
Andrew Lofredo([00:00:53]) – Sure. And that’s that’s a long time since it’s been a close to 30 years.
Andrew Lofredo([00:00:56]) – But I’ll do my best. So I start I’ve been in real estate for a long time, actually started off doing residential brokerage, believe it or not, but really quickly transitioned into commercial real estate. And I’m sure we’ll get into this, but I’ve touched nearly every aspect of the commercial real estate industry. Started off as an R, a clerk out of out of college, transitioned into tenant rep brokerage, representing office tenants, looking for space while I was doing that, actually became a property manager and went to law school in the evenings while was a property manager and ended up practicing law briefly in real estate but quickly transitioned back to property and asset management. Worked for a number of large firms, CBRE, and then transitioned into working for some of my clients direct direct owners, and through that experience developed a good model for working with wealthy families and family offices and direct owners and ultimately created my own shop to do just that. You know, bring bring together some institutional management with, you know, working with those the nuances of family offices and an entrepreneurial environment.
Sam Wilson ([00:02:15]) – Yeah, absolutely. Well, tell me this. What what are some of the problems that you guys solve for that family office high net worth individual.
Andrew Lofredo([00:02:25]) – You know it’s it’s it can vary and that and that’s where actually one of the problems we solve is there’s a lot of nuances in the way family offices are structured. It requires a bit more hand-holding than than working with institutional investors. You know, sometimes that’s just a matter of, frankly, dealing with disputes, dealing with families that don’t see things eye to eye. Sometimes it’s dealing with varying degrees of real estate knowledge. Sometimes it’s inherited wealth. Um, there’s taking the next generation, you know, under under my wing and helping them understand what they’re, what they’re working with. And really some of it just comes down to it’s a key. It’s a fundamental part of the way we approach the business is just working with the family to clearly define their objectives, because it’s not it’s not always the same. And you might not even be the same among family members.
Andrew Lofredo([00:03:24]) – But working to set a clear objective is a critical component of what we do. And then obviously delivering the strategy on that.
Sam Wilson ([00:03:31]) – Right, Right. So family offices may come to you with a portfolio they own and or they may come to you and say, Hey, we would like to have a portfolio that looks like this, and then you guys will go out and help them acquire those assets and or manage those assets, is that right?
Andrew Lofredo([00:03:48]) – Exactly. And sometimes it’s a matter of both really taking over an existing portfolio, working with them. A lot of times these are very long term holds. You know, it’s not the traditional what you would see in terms of the, you know, five year old, you know, buy a buy a value add, do your do your strategy and sell it in 5 or 7 years. You know, a lot of these families, these are legacy properties. So it’s a matter of really looking at them and saying, okay, how can we continue to add value to this? Is it still right for you to own this based on your objectives? And if we’re going to sell it, there’s obviously additional tax issues.
Andrew Lofredo([00:04:28]) – When a family is held a property for years normally as a zero or, you know, zero basis. So then we have the issue of, okay, how do we move into the next whether it’s a 1031 or some other tax strategy? Um, so it’s and just explaining that to them and understanding what their, what their opportunities are is, you know, that’s again, a critical component of it. And not everybody and I don’t mean this in a negative way, not everybody understands it because it’s not what they do. They may have inherited. You know, a lot of these companies, for example, were retailers. They’re no longer in the retail business, but they own their real estate now. So they become real estate people and they need somebody to really guide them through that.
Sam Wilson ([00:05:13]) – What’s the difference in the types? And this is probably more of a just a curiosity question, but working with someone who is bootstrapped their way to wealth, this is working with the person that inherited it. Is there is there a different kind of approach you have to take with.
Andrew Lofredo([00:05:28]) – Those clients. There is. There is. And it’s it’s you know, and again, it can vary because I’ve dealt with families where you have the bootstrap and you have the next generation that worked with the bootstrap and then you have the next generation that’s removed from the bootstrap and each one has a different, you know, a different approach. Sometimes it’s really just a matter of actually understanding the business. The further removed you get, the less there is of an understanding of the business. So it becomes a bit more educational, right? And that’s part of what we do. You know, it’s speaking in layman’s terms. You know, I’m not just, oh, this is the cap rate, this is the IRR above. It’s, you know, again, it’s not meant to be sound like a negative, but it’s a matter of how you explain what you’re doing and how you’re adding value. So sometimes the value, it’s not as clearly understood the further you get away from the bootstrap or in terms of in terms of what you’re doing.
Andrew Lofredo([00:06:24]) – So it’s a matter of education, I think is the critical part of it. And frankly, you know, when you’re dealing with family offices after a certain point in time of being removed from the bootstrap, it simply comes down to an expectation of continued cash flow from the properties, you know, almost as if it’s the guaranteed income. So when you take over that type of portfolio, there is also an education process. On the importance of reserves, the importance of how you actually continue to maintain that property. So it’s it requires a lot of dialogue and explanation, you know, on why why I’m doing what I’m doing really to help them preserve their wealth, but to make it make it clear what the what the strategy is.
Sam Wilson ([00:07:13]) – Yeah, I bet. I bet it does. It seems it seems like a very white glove sort of service that you guys are providing there. What’s it been like building your own kind of internal team to help you accomplish this?
Andrew Lofredo([00:07:28]) – You know, I think that that’s an important part of it, the way the way you mentioned the white glove service, because it really is, you know, when when I deal with my clients, you know, in addition to the regular real estate aspects of it, you know, we’re dealing with trust structures and multigenerational items.
Andrew Lofredo([00:07:45]) – So I often, you know, understand their structure better than they do because I’m in the weeds on it. So when I’m building my team, it’s it’s also making sure I have a team that’s interested in that kind of valued approach and that hand-holding. So, you know, as, as I look for people, it’s definitely critical that we have the real estate knowledge, but also the, you know, I don’t hire people that, you know, will say that’s not my job description because, you know, when you work with the types of clients we have, you get thrown a lot of curveballs. You need to wear a lot of hats. And that’s what I love about it. You know, I mean, today, as a perfect example, I was negotiating a contract this morning. I’m having this great conversation with you. And then after this, I’m out to meet some contractors to walk through space. And you know, that that to me is what excites me about, you know, about this role and about what we do here, again, gets very granular.
Andrew Lofredo([00:08:48]) – And that’s what I look for from my team, you know, and the important part, though, is, you know, don’t get me wrong, I need to set a very clear structure and guidelines so people know what they’re accountable for. Um, but we, we all need that flexibility in our in our job descriptions, right?
Sam Wilson ([00:09:08]) – Absolutely. How do, how would you say your clients approach the way they invest versus. Just a regular guy off the street. What are what are some different methods or some ways, ways that you see the family office, the high net worth individual, the private investor. What’s what’s what’s their strategy and what’s what’s a what’s a what’s something we can learn from what they’re doing.
Andrew Lofredo([00:09:34]) – Think you know and that’s again appreciate the way you worded that because it’s something that I look to do with others that I try to bring in on the investments is it’s a focus on generational wealth and a longer term hold. Um, you know there’s there’s a number of different ways to look at it.
Andrew Lofredo([00:09:53]) – There’s a focus on cash on cash return tends to be, you know, the dividends, the distributions tend tend to be a focus. But there’s also you’ll often see some patient money. Again, it’s not the 3 to 5 year flip. It’s okay if I were to buy this property and hold it long term, pass it on to the next generation. What’s that going to look like for me? What do I need to invest now? Um, and you know, what will that look like in the future? It also tends to be lower leverage. Um, you know, we, we’re often and you know that that allowed us to do you know right as the interest rates were going with one of my clients I did seven revise and the reason we were able to get, you know attractive rates was because their TVs were mostly below 50%, you know, so it’s not looking for the quick IRR in terms of just leveraging and then selling based on some appreciation. Not that there’s anything wrong with that.
Andrew Lofredo([00:10:52]) – I’ve done that in my life as well. Sure. But their focus tends to be, you know, longer term.
Sam Wilson ([00:10:59]) – Wow. Okay. And that’s very different. I mean, we’re working on some stuff right now that’s eight, 8 to 10 year and pitching that to investors. You know, it seems long, you know, to a lot of stuff that people are seeing out there and they’re like, oh, eight years. I’m like, yeah, it’s not it’s not that long. I mean, really not.
Andrew Lofredo([00:11:19]) – But when they’re used to it, you know, a three year or they hear a three or a five year and five years is the long part of it. It it starts it starts to seem long. But, you know, as I’m sure you’re seeing, things are it says a lot of uncertainty in the market. And it it it puts us in a position where it takes a little longer to execute a strategy. And you have and you have to build that in you know, you have to build that into it.
Sam Wilson ([00:11:43]) – Right, Right. And especially after coming off of the high of, you know, all these five year projections that ended up being 18 months, you know, turnaround deals in multifamily and everything we’ve seen for the last 4 or 5 years, it’s, you know, five years does seem like a long time. I like the way you put it there. Patient money, a focus on cash on cash return, lower leverage. Is there anything else or some some shifts that you’re seeing kind of even now in the way that your clients are approaching today’s market?
Andrew Lofredo([00:12:14]) – Well, you know, it’s a little tough now with the you know, with interest rates where they are, it’s harder to execute. And that’s also it’s part patience. But sometimes patience leads to waiting on the sidelines too much. So there’s that balance between are we are we being patient or are we just out of the game? Right, Right. So I think that’s part of it. And then and rightfully so, when you’re dealing with family offices, there’s there’s opportunity costs involved.
Andrew Lofredo([00:12:39]) – You know, if we’re looking to buy a retail property that the seller still wants to sell it at a at a four cap because they haven’t made adjustments to where we are in the market. But now we can just put money in a, you know, in a money market or a CD and make 5%, you know, so it’s it’s not just real estate family offices. Look at a larger, um, you know, opportunities for to put their money for for their for their wealth. So you know that that comes into play as well is what what you know where else can we put this money and what would our, what would our returns be. Um, so that’s you know, that’s certainly a factor and I feel like I’m getting that question more. As interest rates have gone up, it was very easy to underwrite when you’re doing a deal at, you know, 3.2% as a as opposed to, you know, 5 or 6.
Sam Wilson ([00:13:31]) – 5 or 6 or Yeah, we’re even seeing stuff even a lot higher than that, which is right, Which is crazy.
Sam Wilson ([00:13:37]) – It’s crazy times that we are in so CRE vertical. I mean you guys, you guys have to manage a lot of different people. You know, as you’re working with these family offices, you’ve got you’ve got everything from what you guys do to asset managers to and I’m not even going to name them all. Maybe you can talk to the unique challenges maybe that that family office comes to you guys to solve as it relates to that.
Andrew Lofredo([00:14:00]) – Yeah. And that’s that’s, you know, really the way we designed this firm. You know, as I was mentioning in the beginning, I’ve touched just personally have touched a lot of different disciplines within the real estate, you know, within the real estate industry throughout my career. And as part of that, as I grew throughout my you know, throughout the progression, I realized that really all of these are connected and to provide, you know, true quality and value. And it’s it’s not just doing what you’re doing in silo, it’s managing all of these disciplines.
Andrew Lofredo([00:14:32]) – And that’s really where the name Comfort comes from. You know, it’s we manage all the district disciplines within the real estate vertical, hence the vertical and that that covers really, you know, there’s of course asset management, there’s property management, there’s leasing, there’s construction, there’s the acquisitions and dispositions, there’s risk management. And that’s just within the real estate world. And we and we handle all of that. But then when you’re dealing with family offices, there’s also working with outside folks. Um, you know, there’s, there’s the legal, the estate planning, making sure we’re communicating with their estate planners. There’s tax planning. You know, we, we do regular property accounting, but we’re, we’re not tax people. We coordinate with their, their tax people. Um, you know, the same thing with, with attorneys. I’m an attorney myself, but as I like to refer to myself as a recovering attorney because, you know, I don’t practice. I’m a real I’m a real estate business guy who happens to be a lawyer.
Andrew Lofredo([00:15:33]) – But we work very closely with outside counsel on the leases. And there are other agreements, but it’s really about managing all of those disciplines. And, you know, our approach is, you know, the way we the way we say it is first, let’s define what our objectives are, but then manage all of those disciplines to achieve those objectives. And hence that’s where, you know, I say it a lot. It might be corny, but it means. It means something to me is where we connect the dots across the industry because that’s, you know, that’s really that’s our value add, especially when you’re working with more of an entrepreneurial or a family organization is we may not do everything in-house, but we try to as best we can, is to help them connect all of those disciplines to really get get after their objectives.
Sam Wilson ([00:16:19]) – Right. Because the amount of time it takes just to coordinate all of those things can be mind numbing. I’m just thinking about a deal we were doing recently where my attorney was talking to their attorney who was talking to them, who’s my attorney is talking to me and we’re going back and forth and trying to make and it was just a single purchase and sale agreement.
Sam Wilson ([00:16:36]) – I mean, it was not that hard, but it was still 20 emails and a lot of like, hey, there’s subparagraph B 0.9. You’re like, okay.
Andrew Lofredo([00:16:42]) – This is.
Sam Wilson ([00:16:43]) – So doing what you guys are doing, I can only imagine brings incredible value to those family offices because this is this is not just one deal. This is at scale. And you really, really need to be you guys in the quarterback position running, running the whole thing.
Andrew Lofredo([00:16:58]) – Yeah. And that’s the way I prefer it. I mean, sometimes it obviously creates, you know, stress. But you know, ideally we do asset management and property management generally. I want to do both, you know, not, not, you know, or just the asset management we will sometimes do for select clients, just property management. But being in the driver’s seat or at least having a seat at that table is is our value add. But it also makes my life easier because I can come in and and quarterback it and at least try to try to drive it as opposed to you can sometimes end up chasing your tail if you’re not in control of the situation.
Andrew Lofredo([00:17:36]) – I can.
Sam Wilson ([00:17:36]) – Only imagine. Andrew This has certainly been insightful. I do appreciate you taking the time to come on the show today. You’ve told us a lot. Well, your history in and of itself, of just what you’ve done in the real estate space is really, really cool. You’ve given us some nuances to how the family offices think into what they are investing in right now and kind of the strategies they are taking. The idea of generational wealth and thinking about it from that perspective I think was a really cool point you made there as well. But certainly appreciate you coming on the show today. This has been great. If our listeners want to get in touch with you and learn more about you, what is the best way to do that?
Andrew Lofredo([00:18:06]) – Well, you can certainly check out our website. It’s it’s CRE vertical. You know, there’s a link to my LinkedIn there as well. You know, feel free, of course, to fill out one of our forms and contact us. We have a book, a call if somebody and it’s a free consultation, if somebody wants to talk to us or of course subscribe to our newsletter and it’s fairly easy to find me on on LinkedIn, which is probably where I’m most active from a social media standpoint.
Andrew Lofredo([00:18:32]) – So it’s just. Andrew Loredo And you know, again, happy to, happy to connect with anybody on that platform.
Sam Wilson ([00:18:41]) – Andrew, thank you so much for your time today. I certainly appreciate it.
Andrew Lofredo([00:18:44]) – Yeah, thank you. Glad to be here.
Sam Wilson ([00:18:46]) – Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
