September 17, 2021 • 43 mins
Jeff Danley, Founder, Chairman and CIO of Peak Capital Partners joins GreyCast to talk about attending BYU, growing up in the midwest and Peak Capitals accession within the Multifamily space.
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And the reality as you grow you'vegot to continue to reinvent yourself in your
systems. Hello, this is AriFuzabody. I am the CEO of Gray
Steal. Gray Steals a national boutiquetop fifteen commercial real estate capital market services
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from I want to welcome and alsothank you for joining Gray Casts today.
This show is an open and lightconversation around entrepreneurship, life and the lessons
we learn along the way. WhenI was younger, I was always looking
for folks I could find inspiration fromand to inform my path. And I
hope that the young people that arelistening to Great Casts today find value in
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hearing the experiences our guest share.I would love to hear from any of
you that are listening in. Feelfree to reach out to me on LinkedIn,
my social media channel of choice.Joining us on Great Cast is Jeff
Danley, a graduate of BYU andDartmouth. Jeff is the founder of Peak
Ventures, a venture invest and PeakCapital Partners, a multi family investment firm,
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and a few other companies as well, all of which are wildly successful
and ranking the top docile and ourleaders in their sectors. We had a
great conversation around Jeff's life career andthe lessons he's learned along the way.
Thank you again for joining us,and hope he takes something away from our
conversation with Jeff. My takeaway wasthat, you know, Jeff is a
very successful guy, but he tookthe time early on to learn from those
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that had done what he was tryingto accomplish before him. Oftentimes some of
us feel inadequate to ask for mentorship, but my view, that's a missed
opportunity, and it's clear that Jeffcaptured that opportunity. In any event,
I hope you enjoy the conversation andplease feel free to reach out to me
on my social media channel of choiceLinkedIn take care of good afternoon, everybody.
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Thank you for joining us on ourpodcast today. This is Ari Fruz
Aboudy, CEO Gray Steele. Joiningme is Doug Bannergy, senior Managing director
with Gray Steel, and today's guestis Jeff Danley, Founder, chairman and
chief investment officer of Peak Capital.So thanks Jeff, Thanks Doug for joining
me today. Thank you for havingme so, Jeff, we have known
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each other for some time and we'veour businesses have done business together. But
for the purpose of this discussion,what would be helpful, I think for
our listeners is for you to maybegive it just a little bit of your
background, where'd you grow up,where'd you go to school, and I
kind of lead us into your professionalcareer, if that's okay, Okay,
yeah, absolutely. I was bornin Houston, Texas. When I was
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fairly young, my family moved toUtah. So I grew up in Hebrew
City of Utah, which is nextto Park City where probably a lot of
you have been skiing, and didundergrad at BUYU, moved to the East
Coast. My wife went to gradschool at Yale, and I worked for
a venture capital firm five years inConnecticut, and then when I went to
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business school at Dartmouth and then umafter leaving Dartmouth, started starting my company,
Peak Capital, and really had theidea to start the firm. The
first house I bought was at duplexand duplex on a lake in Connecticut,
and my tenant, the runt thatshe paid was more than enough to cover
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all of my costs to live there, and so we lived there essentially for
free. And I thought, thisis a great this is a great business
model, but I didn't love sortof being the maintenance person and doing all
the work myself, and so Ithought, you know, I really need
to scale this. So that wasthat was the initial idea for PEAK.
So I met I started PEAK withtwo partners, Jamie Dunn and Jeff Birningham.
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I met Jamie at business school.He was at Wharton at the same
time I was at Dartmouth. Andthen after we graduate, I called him
and said, you'll start a firmto buy multi family and we graduated um
in two thousand and six, andit coincided pretty well with the start of
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the real estate recession. It wastwo thousand and six, two thousand and
seven. I think it was prettyobvious to most people. We were in
a pretty massive real estate bubble,and yeah, I called Jamie and just
said, hey, let's let's starta firm to buy distressed real estate on
the back of this. So twothousand and seven, you know, we
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underrote a bunch of deals, butjust didn't find anything that we felt.
Everything felt really expensive in two thousandand seven, so we didn't buy anything.
Two thousand and eight, we reallycouldn't buy anything. The markets were
just frozen. I think I thinkif we were had been a more established
firm at that point, we probablycould have gotten some transactions done, but
we just didn't have the broker relationshipsand the lending relationships that we have now.
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So two thousand and nine was theyear that we bought our first department
complex. That year obviously a greattime to be a buyer. And then
since then we've acquired over two hundredapartment communities, over forty thousand units,
you know, cross like twenty fivestates, focused mostly I would say,
on the Smile States Washington, Oregon, down through the Mountain West into the
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you know, sun belt, Texas, and then into the southeast. It's
been a great business last ten years. We've we start our own management company,
Peak Living, about seven years ago, and so today we self manage
all of our own properties, andwe've sold a lot of properties in the
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last few years, but today weown just under thirty thousand units. Yeah,
it's been it's been a lot offun the last ten years. Quite
quite a run. So take mebackwards a little bit. So you you
go to undergrad and then you goto graduate school, and so this is
essentially is this did you have anyprofessional experience in between or during school or
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was this really your Were you buyingproperties these single family homes is kind of
your your main gig. So Iworked between undergrad and graduate school. I
worked for a venture capital firm forabout five years, and then I was
buying. As I mentioned, Ibought a duplex and then I started buying
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more. So I was buying justkind of duplexes and four plexes with my
own money all during that time.So that was about a six seven year
period. Bought properties in Connecticut,New Hampshire, Vermont. So I was
living out there in Utah, sothat that was really the base of my
experience. I was just buying somany smaller rental properties with my own money.
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And then, um, you know, when I left business school,
decided to really scale it up andyou know, buy bigger properties, raised
third party capital, and and reallygrow up a big business out of it.
And then you clearly have done that. Jeff and Jamie are co founders
in the Peak Capital business. DidI hear you, Crickly you met them
in school or did you know themprevious? And then how did you guys
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divide and conquer the roles and responsibilitiesassociated with scaling an enterprise. Yeah,
so Jamie and I met. Iwas at Darmouth US at Wharton, there
was a there was a networking groupfor BYU students who were going to business
school out east, and so Imet him through that. All the all
the business schools out there at Harvard, Wharton, you know, Yale,
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Dartmouth, we'd all get together acouple of times a year. There's a
group of like sixty of us.So I met him through that group.
Jamie and Jeff had actually been friendsat undergrad at BYU. They also both
went to BIU for their undergraduate education, and they were both a couple of
years younger than me, so theyI didn't meet them at BYU. They
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graduated a couple of years after me, but that's how they met and then
they just stayed in touch. Jeffafter graduating undergrad he started a couple of
different technology companies, and Jamie workedat Baine before going to business school at
Warden. So, you know,in terms of dividing and conquering roles and
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responsibility that I think with a startup, you know, everyone sort of does
everything. In the initial years,Jeff burning him led out more. I
would say on on equity fundraising.Jamie and I both had some real estate
experience, so we let out moreon acquisitions of properties, and then within
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a few years it evolved to apoint where Jamie and I were I would
say co CEOs P Capital, althoughwe never had that title explicitly. And
then Jeff burning Him, who wasspending most of his time doing venture capital,
that was kind of where his backgroundand really interests lied. And so
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a couple of years after forming PeakCapital, we launched a venture capital fund
called Peak Ventures and Jeff Burnham reallyspearheaded that, and that firm has since
grown. We've raised about one hundredand fifty million to invest in seed stage
technology companies here in Utah, butthroughout really the Western US, California,
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Colorado, Arizona. So Jeff withina few years really whose main focus was
on Peak Ventures, and then asI mentioned, Jamie and I until recently
have kind of operated as co CEOsof Peak Capital. Jeff, where did
the name Peak right? How didyou guys come up with that? Yeah,
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that's a good question, Doug.We considered a lot of names.
You know, our offices in Provo, it's right at the base of some
big mountains and if you look outof our window, you can see,
you know, a mountain that's almosttwelve thousand feet high, So you know,
we were sort of in the shadowof those peaks, and so that
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that's where the name came from.Just the mountains around us. Very cool.
So with regards to the two businesses, so you have the you have
the Peak Capital business, an integratedmulti family investment manager, and then you
have the Peak Ventures business. What'sthe overlap between the two? I mean,
other than clearly the founders and Iguess the passion of one of the
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founders, how do they interact withone another? Yeah, it's a good
question. So some of our investorsare consistent between the two companies, So
that's one area where they overlap.And then we do you know, one
of our folkses at Peak Ventures,and we actually rebranded that firm a few
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years ago to Album Ventures, mainlyto differentiate it from the real estate business.
But one of the folks is atAlbum Ventures is real estate technology,
and with our portfolio of multifamily obviouslywe can test and try out products before
we invest in the companies. Sothat's been an area you know, that's
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been I think pretty interesting. Andin one example I'll give you, there's
a company called fire Avert. Theyproduce a product that essentially it connects to
a stove, either an electric orgas stove. If the smoke alarm goes
off, it can hear that andit will shut power or gas to the
stove. Eight percent of fires inthe US or cooking fires. Any any
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multifamily owner will tell you that theyhave fires with some regularity, and most
of those are caused, you know, by a tenant leaving you know,
something on the stove and forgetting aboutit. So, you know, Firevert's
a company that approached us as apotential customer, and we ended up making
an investment in the company through PeakVentures and becoming a large customer. We've
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also you know now introduced that productto a lot, you know a lot
of our partners and friends and competitorsin the industry. So it's just one
example of kind of how the twofirms work together. But the reality is
that I would say, I meanAlbum Ventures is has a very different mandate
from from Peak Capital. It's focused, you know, as to invest in
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early stage tech companies in Utah,whereas Peak Capital is you know our mandate
is to invest in multi family throughoutthe country. Jeff, I'm curious about
the fire avert product there, socan you give a little more detail like
when it was founded, when youguys invested in what series round it's in
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now and kind of where it standsfrom evaluation standpoint. Yeah, it was
started by a firefighter actually in Provo, Utah. He had gone all these
fires and he realized most of thefires were caused by you know, food
burning on a stove, and hethought, there's got to be an easy
way to solve that. And there'sthere's a variety of products out there that
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you can attach to the hood abovethe stove that will spray like a chemical
down on a cooking fire. Butthe reality is those don't put out the
source of the flame, which isthe heat from the stove. So he
came up with this device that connectedthe stove. It could hear the smoke
alarm. If the smoke alarm goesoff, it would just shut power to
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stove. And we did a lotof test into this. We would put
like a pan of oil on thestove and turn on high and let it
start to burn, and in everycase, the Firebert would stop the fire
from from actually starting. So whenhe approached us, he had only sold
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like a few hundred units. Wehave rolled it out to all of our
units, so you know, we'veacquired over forty thousand units. We've introduced
it to a lot of our youknow, fellow owners. So like I
know Bridge in Utah uses fire,there's a number of large companies that our
customers now. So I don't knowexactly the number of units he's sold,
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but hundreds of thousands. I believehe's in home depot or low So there's
a retail channel. Also, wewent on Shark Tank actually with fire Her,
which was a pretty fun experience.Didn't end up getting a deal done,
but it was good marketing for thecompany, and you know, we
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did I try to remember how much. I can't remember how much we invested,
but we did around and then thecompany has not raised a subsequent round.
They've they've been able to just growand fund operations through product sales.
So they're doing really well. Peterwho started the company is still the CEO.
They're continuing to grow kind of twentythirty percent a year. It's a
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great story that is so in termsof the business focus. I mean,
so look, I mean you saidit best. I mean the timing,
you know, to raise money andthen eventually start to blowing money and buying
your first complex of multi family apartmentsin two thousand and nine was you know,
it would be an understatement and sayit was good timing. It was
an amazing timing because I remember comingout of the what we're I guess we're
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now calling the Great Financial Recession,the financial recession, I guess is what
we're calling it now, because thatwas in anyway, looking backwards, I
think we all thought that was theworst it could get. And and then
you know, March and April weretough months, but so you had a
great run up because property values,you know, there was a return,
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borrowing costs went down, you knowover the course of you know the course
over the course of the last elevenyears. And we've seen a great deal
of asset pricing inflation. But youknow, have you looked at, uh
investing in other asset classes. Imean, you have a I mean I
believe I don't know what your accountis now, but I know you're you
know, up there in terms ofthe largest owner operators in the United States.
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But have you looked at you know, Bridge as an example, you
know, they're right there in Utah. They have a diversified business. Have
you looked at other product types?Yeah, it's it's a good question.
Obviously we have the venture fund,so that's you know, then that's become
quite a large business. We're thelargest seed stage venture fund in Utah and
are very active throughout the Western US. We started a subsidiary company several years
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ago called Tunbridge Peak in that companyand it's run by a different CEO again
in Matt mcconky, and it investsin self storage and assisted living and memory
care facilities. So we do havequite a large investment in those two industries,
and we've talked about other industries inthe past. I think one of
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our you know, one of ourguiding principles has always been to focus.
Because you get good at something,I think there's the temptation to feel like
you can be good at anything,or you know, good at other sectors
within real estate, and so oneof our core theses has always been just
to really focus on multifamily and Ithink that served us well. You know,
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we've we've been able to do reallywell, and it's such a big
industry as you know that. Youknow, even though we're in the top
you know, we've been in thetop fifty owners in the last several years,
there's still a lot of room forus to grow. So, you
know, bottom line is, Ithink will continue to focus on multifamily and
just continue to grow the portfolio.Where do you so, where do you
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see the business going? I mean, thirty thousand units, you've you've now,
I mean, I believe, ifI'm not mistaking, you were third
party managing and you just said,I think you're you're internally managing assets.
Now do you have a you doplan on building buildings or continue to buy
existing assets? Yeah, well,I would say, you know, we
want to continue to grow the portfolio. So as you guys know, we've
sort of looked all over and Ithink one of our guiding principles the next
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ten years will will be to consolidatemore in the markets we really like.
So, you know, markets likeSalt Lake, Denver, Phoenix, Dallas.
We're going to just try to consolidate, build our presence in those some
key markets more. You know,our management company is doing a great job.
Will continue to grow that we're aboutsix hundred people now in that company.
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You know, we've moved more Iwould say, from value add to
kind of core plus bigger assets overthe last several years. I think that's
a trend that will continue for us. We've done some big portfolios. We
just closed a twelve property portfolio NorthCarolina earlier about a couple weeks ago.
So I think you'll continue to seeus kind of buying bigger portfolios, which
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just more efficient for us than buyingone off properties. And you know we've
done historically, we've mostly done acquisitionof existing properties. We have done a
few ground up developments. We're actuallylooking right now at five ground up developments,
four in Texas and one in Idaho. It's getting so expensive to buy
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existing now that if you can findthe right partners that bought land you know
earlier in the cycle five seven yearsago, development is starting to starting a
pencil better and make more sense.So I think you'll see us do more
developments in the coming years. Butyeah, it's really it's really just kind
of continue to grow, you knowwhat you know on the platform that we've
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established, and so so other thanagain, just so I understand correctly.
Yet you have the Peak ten Bridgebusiness which is seniors self storage and I
think one other product type, butI believe you guys have done a quite
a bit of volume on the seniorside through that business. And then you
have the conventional multi family business throughPeak, and then you have the album
business which is venture. And soyou all are you and your two partners
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are called the code either the soulGPS or the COGPS of those three businesses.
But there's an operator that runs thosebusinesses. And are you the CIO
for all three or just this business? Yeah, I'm the CIO for just
Peak Capital. So about three yearsago we promoted Chris Manning to be CEO
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of Peak Capital and then gentleman namedSue croman Hook runs Album Ventures and he's
got a team of four or fivepeople that help him run out business.
And then we've got Matt mcconky whoruns the Tunbridge Peak. I'm CIO ver
just Peak Capital, but I'm youknow, I'm heavily involved in an album
and Tunbridge Peak. Do you allhave a specific management you know, kind
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of management style or management philosophy?You know, there's different programs out here
that you can follow, and soI was just curious, do you do
you have one or did you guysformulate your own in terms of the way
you are operating your businesses in termsof the management format do you mean the
software we use or more like themanagement of philosophy? Yeah, the management
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of processes? So like there's uh, I think we've been recently, we've
been going through the book Traction asan example. You know, there's a
donnaher model. There's a bunch ofdifferent models that you can find. The
Gazelle model, I think is anotherone, but there's a bunch of different
models you can follow as to howto how to scale an enterprise. I
mean, the Koch Brothers have amodel as well, and read I read
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their book a while ago. Haveyou created your own way to manage and
scale a business through experience or haveyou leveraged some of those existing management philosophies
and models that folks have written booksaround. That's a good question. I
would say. Our core strategy hasbeen to hire really experienced, you know,
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people who have come from big organization, big organizations, you know,
so we've hired from like Great StarAlliance, so people that kind of grew
up in those management structures and learnedthere and then brought what they learned over
to Peak Capital and then, youknow, early on, I wouldn't say
there was like a specific book thator a specific style that we necessarily have
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built on. We've you know,we've read a lot of those books would
incorporate a lot of those ideas.I would say that the main thing we
did early on this and this islike two thousand and eight, two thousand
and nine, was meet with alot of the large multifamily owners in the
country and get to know them,you know, Like one example is Bob
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Hart of True America, who's afriend, you know, friend of mine.
So people like that who had beenin the industry for a long time,
had had lived through, you know, multiple cycles. We're in the
top fifty multifamily owners, and reallyjust sit down with them and say,
you know, how did you scaleit, what did you do well?
What things would you change if youcould do it all over again. And
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we were having those conversations when weown one property or two properties, So
I think that was really for us. The key is trying to learn from
those, you know, the otherowners in the industry that came before us
that had built firms the size ofwhat, you know, what we wanted
to build, and then try toscale it, you know, based on
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the advice and recommendations they were givingus. Who gave you the best advice?
That's a good that's a good question. The best advice you can You
can maybe say, well, maybeI don't need to call you out,
but maybe you could tell us whatwas the best advice you got? Probably
the advice I don't know if it'sthe best advice, but the advice that
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has sort of resonated with me andhas held the most true the last ten
years was advice that I got.Is basically that like scaling your firm is
sort of a stair step process.So it's not it's not linear, it's
not geometric. It's more of astair step where you grow in a linear
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way from one to twenty properties,but then at twenty properties it's an entirely
different firm and structure than it wasat one. And then that is true
again when you go from twenty tofifty properties, and fifty two hundred properties
and one hundred to two hundred properties, and so you know, it's anover
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a clean I think we're always lookingfor like a clean linear path or a
structure, like a one size fitsall structure. And the reality is,
as you grow, you've got tocontinue to reinvent yourself in your systems and
your people. Some of your peopledon't scale when you go from twenty to
one hundred properties. And so thatwas advice that I got early on.
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I didn't quite understand it, franklybecause I hadn't lived through it. But
none of that, it's lived throughit. It's you know, it's something
that I've found it be true andhas helped who's helped me and our firm
as we've continued to grow. Iwould agree with that. I mean,
that's been my experience as well.I mean, it's a yeah, I've
explained that as well to some ofthe folks that have worked with me in
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the past. The concept of uh, you know the step ladder or stairs,
you know, the step growth modelwhere you go up, you flatline
to absorb what you've what you've accomplishedor acquired, and then kind of re
envision the path forward for the nextflurry of growth. And so for you,
what's been the most I mean,so you know, you know,
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you know they say the first millionsthe most difficult, and then you know,
then you get to twenty and thenthe hundred whatever. You know,
in terms of like net worth,the way people explain the acquisition of net
worth, but in terms of scalingyour business, what was the most difficult
part in the journey? You know, if you if you're gonna go,
if you look back and say,Gali like that was that was really hard?
You know, that's that's that Whatwould you say would be the step
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that was the most difficult for you? And why? Yeah, I think
the hardest thing at every level,it's the hardest thing. It's also the
most rewarding thing is just having theright people in place to be successful.
Because when we were when we ownedone or two properties, Jamie and I
could do everything, you know,for the most part, but when you
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get to twenty you've got to bringin additional people and fifty and one hundred,
and so I think that's been themost challenging, but also the most
rewarding is first just finding the rightpeople and then training, motivating them,
making sure you have the culture setup correctly so that everyone's working toward the
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same goal. That's also been themost rewarding for me because I look back
now, we've got an amazing team. We've got great people in each of
the key roles, and you know, we have you know, close to
six hundred and fifty employees today andso to just think about that I get
to work with them. I wasjust in Atlanta actually yesterday with twelve of
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our people, you know, justthe opportunity to work with them, knowing
that we're providing a career in asafety and security for their family. That
that's just a great feeling. It'sback when we had two employees. I
knew I wanted to grow, butI don't know if I, honestly,
if I ever thought we would have, you know, six hundred and fifty
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employees. So that's been a reallyexciting thing for us. How have you
gone about recruiting the best talent?You know? Because you know, I
agree with you, you're only asgood as your bench right, so you're
only in my mind and experience.You know. The success that I've achieved,
and Doug would say the same,I'm sure has been because I've been
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able to scale right, scale myself, scale my efforts, scale my focus.
And you're only as good as thefolks that you surround yourself with.
And so how have you gone aboutacquiring, you know, the best talent.
You clearly said you've looked at recruitingout of larger companies that people that
have kind of done it before.But more granularly, are you guys using
headhunters? Are you approaching them yourself? Are they coming to you? How
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do you how do you get thebest talent? Yeah, it's it's all
those methods. I mean, wehave used headhunters. I would say we've
had some success with that. Infact, our CFO came through a headhunter
and he's been fantastic. But mostof our hires have come just through relationships,
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and it's been people that you know, maybe we met. So we
were working with Alliance early in ourgrowth, and we met people at Alliance
who you know, we really connectedwith, who did a great job,
and so you know, we hiredthem at some point. You know,
Jamie I met through business school.Chris Mann and I met through business school.
So it's been a lot of personalconnections and personal networks, you know,
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as we've grown some of our teams, you know, and this is
true of our construction management team andours set management team. You know,
we've just gone to ours. Aswe've needed to add people, We've gone
to our team members and just said, who do you know out in the
industry. That's great and we've foundthat to be very successful and a lot
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of you know, asset management andconstruction management in particular, our teams are
all people who have kind of knowneach other and work together in various capacities,
you know, for ten, evenfifteen, twenty years. We also
one thing I will mention too that'sbeen very successful for us, and I
think I would recommend it to otherfirms is we have an internship program.
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We draw mostly from BYU because Biusyou know, a couple of miles down
the road from our office. Butwe interview and bring in, you know,
twelve to fifteen interns each year.Most of them are typically financed or
accounting undergraduates, and then really forus and them, we have sort of
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a three to six month interview processwhere they're working for us, they're getting
experience, and almost all of ouranalysts, associates, many of our acquisition
deal leads, some of our youknow, people in other areas asset management,
construction management, have come through thatinternship program initially, and even interns
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who we haven't hired, I thinkit's been very beneficial for them because they've
gotten experience on their resume that hasallowed them to go on. And we've
had, you know, former internsthat have gone to work for Bridge,
Wassatch, Hines, Gray Star.So I think it's been a really you
know, beneficial program for us andfor the interns. So I would recommend
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that for for any you know,any companies that don't have an internship program.
Yeah, Jeff, it sounds likeAri and I are doing something right
or Grace deal is because we've hireda lot of our talent the same way.
Most of the analysts that have comethrough our office, who a lot
of those have eventually become producers,came through our internship program. So I
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couldn't agree more. And then goingback to the team analogy, I just
interviewed somebody here in our office,and I grew up playing sports, and
I love just kind of the teamenvironment and being able to kind of raise
everyone together because you know, we'rebetter as a sum rather than individual parts.
So when I see people with sportsbackgrounds and things like that, that
(31:33):
really resonates well. With me.Do you guys look for something in particular?
Did you play or watch a lotof sports growing up? Yeah,
I was really active in sports,and yeah, sports is definitely a focus
area for us. Jamie and Iboth ran competitively across country and track,
(31:55):
and then Jeff actually played college basketball. So that is something we look for.
It's not, you know, anabsolute criteria, but you know,
if we see somebody that has stronghigh school or collegiate sports background, that
that's definitely a plus in our minds. Well, it's a very competitive business
on every level too, so Ithink that competitive nature translates well into a
(32:20):
commercial real estate no matter what capacity, right, principal side, acquisitions,
brokerage, lending, etc. Yeah, I totally agree. Yeah, a
lot of our team played you know, college football, college soccer, so
that's that's something that we've tried tofoster. So pivoting real quick with COVID
(32:40):
going on now, when we kindof last caught up a few weeks ago,
you said that you guys are asactive as ever. How many deals
are you on pace to close bythe end of the year, And I
mean, what are you just kindof seeing differently now compared to you know,
the previous four or five years thatyou're you're still getting a lot of
business done. Yeah, So wewill close between thirty five and forty acquisitions
(33:05):
this year. A few will probablyyou know a few of those will may
slip to next January. So that'swhy the range. But that compares very
well with last year and the yearbefore. I think we did thirty acquisitions
in two thousand eighteen and like thirtyfive ish in two thousand nineteen. You
know, it's getting harder. Imean, there's plusses and minuses. We
(33:30):
love where debt rates are today.Obviously there as low as they've ever been,
but that's also driving down cap ratesand you know, price per unit.
I was I was making this commentactually yesterday I was you know,
I was in Atlanta. I rememberbuying you know, good b product in
Atlanta for forty thousand a unit,and then it was sixty thousand, and
(33:51):
then it was eighty one hundred,one hundred and twenty. Now now be
product in Atlanti's trade and at youknow, one hundred and forty two hundred
and sixty thousand units. So overthe last ten years we've just seen that
kind of steady increase as cap rateshave come down and debt rates have come
down, and construction costs have goneup UM. But you know, we're
still finding good deals. There's stillI wouldn't say there's a lot of distress
(34:15):
out there, but there's definitely stillundermanaged properties that we can go in and
and improve and grow ni UM.There's still a little some value add deals
that we're finding out there. There'ssome interesting court plus deals that are just
good real estate that you know,we're just excited to own for the long
(34:37):
term. You know, COVID hasbeen it's been a challenge. I would
say we were very scared in Marchjust about what COVID would would mean for
us and our portfolio when you're lookingat you know, when the economy was
shutting down and you're we're looking atthe unemployment levels that that we were and
(34:57):
still are seen. I think thefederal restrictions and state and some state restrictions
on evictions has been challenging for usand a headwind. But I would say
despite all that, and this ispretty consistent across all the industry peers I
talked to, you know, we'vebeen able to collect you know, ninety
(35:17):
five percent of normal or ninety fivepercent of what we've built across our portfolio
pretty consistently since March, and ouroccupancies frankly are as good as really they've
ever been. You know, wehave across our portfolio have our higher occupancy
today than we did back in February. So, you know, COVID's been
(35:38):
a challenge operationally for our teams.It's been a lot of work. We
have a weekly task force call justto discuss and you know, work on
COVID related issues. But all inall, I would say, you know,
we're happy with how the year hasprogressed, especially relative to kind of
what our fears or concerns we're backin March. If you look into twenty
(36:01):
twenty one, what do you whatdo you see? What do you see?
If I were to you know,what do you? No one could
predict the future, but what doyou think is going to happen in twenty
twenty one as it relates to theenvironment. And then and then you're you
know how that may affect you inyour investing thesis? Or are you or
are you just quarter by quarter likewe all are. I'm just curious how
you how you guys see it andwhether or not, you know, the
(36:23):
politics or the virus or any ofthat impacts you know, kind of your
your ongoing strategy. Because I agreewith you the worst of it was in
March and April when the world shutdown and we weren't sure what this thing
was. And today I think wehave a better understanding of what it is.
But we're certainly not out of thewoods. That's right. Yeah,
there's so I would say as faras the election goes, you know,
(36:45):
and you guys are seeing it,there's there's definitely sort of sellers out there.
They're panicking around the election and tryingto sell properties this year. That's
not us, Like, you know, I think things will be different um
under a you know, would bedifferent under a Biden administration versus Trump.
But I think regardless of who wins, this will continue to be a great
(37:07):
area for investment. And there's stilla lot of demand, a ton of
demand for multi family housing relative tothe amount of available supply. So we're
bullish on the industry for the longterm. The two areas we're really tracking
closely right now. One is COVID. I think every month that goes by
(37:29):
without a vaccine and without the economyopening back up, it gets harder and
harder for our tenants to pay rent, and we've seen that in our numbers.
I mean, we've been pretty consistent, but I think you know,
if we don't have a vaccine untilthe end of twenty twenty one, if
the economy stays somewhat closed, youknow, through the next spring or summer,
(37:52):
that's gonna be hard for all ofus, but it's going to especially
be hard for more of our kindof low income tenants. And so we're
definitely watching that closely, hoping wecan get a vaccine, hoping we can
get the economy kind of back open. That'll be good for everybody, but
it will be especially good for thelower income tenants who you know work in
(38:14):
service industries, you know, retail, restaurants, hotels, etc. So
obviously I can't predict that, butwe're hoping that we can get back to
normal as soon as possible there.And then the other area we're watching,
I know it's been a big topicof conversation is just um, you know,
call it climate change or call whateveryou want, but you know,
(38:37):
insurance rates this year are spiked dramaticallyin our industry, and we are seeing,
you know, and I don't havesort of scientific data necessarily to back
this up, but we're definitely seeingan increase in storms, especially along the
Texas Golf and through the Midwest.And you know, we have more claims
(38:59):
this year than we've had in years, and it seems like every year it's
getting worse. And so for usas an owner, we're really starting to
think about like what markets do wewant to be in, and really trying
to focus on markets where we don'thave the climate related changes, climate related
issues that we're seeing, especially atTexas Golf and kind of up through the
(39:22):
Midwest. So that's kind of makingus look even harder at markets that we
already liked a lot, but focusedmore on. I would say going forward,
markets like Salt Lake, Denver,Las Vegas, Phoenix that just don't
have just don't have the weather relatedissues that we're seeing in other parts of
the country. That makes sense,Yeah, I mean, we've seen insurance
(39:45):
costs, I mean across the boardrise, and I think in an environment
where it's very difficult for the insurancecompanies put out cash and generally yield,
I think we're going to continue tosee that paradigm shift with cost rising for
insurance and actually eating eating at youyour earnings. No matter the type of
business that you're you're operating, youknow, if you're at risk of you
(40:07):
know whatever it is, flooding,tornadoes, hurricanes, earthquakes. Um,
So I think, I think,Doug and I see that too. Well,
that's I mean, I look,I appreciate you sharing with us your
story. I mean it's really inspiring. I mean, you guys have built
an enduring enterprise. You know,it's a it's a big business. You
have a great reputation. We've enjoyedworking with you, and it's very interesting
(40:30):
to see the other businesses that youguys have invested into. The reason i'd
ask you the question round management style, if you will, is because it's
not easy to build these things,and you all have built three of them,
and they're all making a mark intheir respective industry niches. So I
guess that what I would ask youon a closing note is, you know,
if you were to go back,you know, and into your early
(40:52):
twenties again, right, I meanyou you launched your business five years out
of essentially at a school, rightout of grad school, what would you
tell yourself the young you in termsof like a redo, like what would
you what's the advice you to giveyourself. Yeah, it's a great question
this time. We've actually talked aboutquite a bit, and I know my
(41:13):
partners feel the same way. Andthe advice is, you're like, just
enjoy the ride more like celebrate thesmall successes along the way. You know,
my partners and I are so typeA, we're so driven, we're
so like goal oriented. You know, early on we had a goal to
own fifty thousand units. We're closeto achieving that goal. But what we
(41:35):
haven't done well is we haven't enjoyedthe ride, Like we haven't like celebrated
the small successes along the way.We're starting to do that more. You'll
last few years. But that'd bea piece of advice I would give myself
or give anyone, because it's ahard as you said, it's hard to
build a business and you can reallyburn yourself out, you know over you
(41:57):
know, try and grow a businessif you're not kind of enjoying the ryde
and celebrate and the successes along theway. So I know that's that's sort
of soft answer, but that that'shonestly, you know, one of one
of our regrets is that we didn'tdo that. More so, stop to
smell the roses in the middle andthe climb up the mountain to get to
the peak. That's right. Yeah, it's Stu Covid. We missed a
(42:22):
comment. Yeah, especially now morethan ever, it's like, just enjoy
the small good moments each day makessense. You know. Look, I
it's impressive what you guys have felt. Like I said, you know,
we're you know, we're rooting foryou. You're running a you're running a
good business, and and we hopethat that the success continues. And we
(42:44):
appreciate you jumping on today and hopefullythe folks that are listening to this podcast
glean some value from your wisdom andyour experience. So we thank you,
Jeff, No, thank you.I appreciate the opportunity and you guys,
Doug are you and your your wholeteam that you've been great partner to us
for a long time and we reallyappreciate that partnership and uh, you know,
(43:05):
look forward to doing a lot alot more work together in the future.
Absolutely, absolutely, thanks Jeff,Thanks guys, Thanks you guys.
Take care, Jeff, take care
And the reality as you grow you'vegot to continue to reinvent yourself in your
systems. Hello, this is AriFuzabody. I am the CEO of Gray
Steal. Gray Steals a national boutiquetop fifteen commercial real estate capital market services
(00:20):
from I want to welcome and alsothank you for joining Gray Casts today.
This show is an open and lightconversation around entrepreneurship, life and the lessons
we learn along the way. WhenI was younger, I was always looking
for folks I could find inspiration fromand to inform my path. And I
hope that the young people that arelistening to Great Casts today find value in
(00:40):
hearing the experiences our guest share.I would love to hear from any of
you that are listening in. Feelfree to reach out to me on LinkedIn,
my social media channel of choice.Joining us on Great Cast is Jeff
Danley, a graduate of BYU andDartmouth. Jeff is the founder of Peak
Ventures, a venture invest and PeakCapital Partners, a multi family investment firm,
(01:03):
and a few other companies as well, all of which are wildly successful
and ranking the top docile and ourleaders in their sectors. We had a
great conversation around Jeff's life career andthe lessons he's learned along the way.
Thank you again for joining us,and hope he takes something away from our
conversation with Jeff. My takeaway wasthat, you know, Jeff is a
very successful guy, but he tookthe time early on to learn from those
(01:27):
that had done what he was tryingto accomplish before him. Oftentimes some of
us feel inadequate to ask for mentorship, but my view, that's a missed
opportunity, and it's clear that Jeffcaptured that opportunity. In any event,
I hope you enjoy the conversation andplease feel free to reach out to me
on my social media channel of choiceLinkedIn take care of good afternoon, everybody.
(01:53):
Thank you for joining us on ourpodcast today. This is Ari Fruz
Aboudy, CEO Gray Steele. Joiningme is Doug Bannergy, senior Managing director
with Gray Steel, and today's guestis Jeff Danley, Founder, chairman and
chief investment officer of Peak Capital.So thanks Jeff, Thanks Doug for joining
me today. Thank you for havingme so, Jeff, we have known
(02:16):
each other for some time and we'veour businesses have done business together. But
for the purpose of this discussion,what would be helpful, I think for
our listeners is for you to maybegive it just a little bit of your
background, where'd you grow up,where'd you go to school, and I
kind of lead us into your professionalcareer, if that's okay, Okay,
yeah, absolutely. I was bornin Houston, Texas. When I was
(02:38):
fairly young, my family moved toUtah. So I grew up in Hebrew
City of Utah, which is nextto Park City where probably a lot of
you have been skiing, and didundergrad at BUYU, moved to the East
Coast. My wife went to gradschool at Yale, and I worked for
a venture capital firm five years inConnecticut, and then when I went to
(03:01):
business school at Dartmouth and then umafter leaving Dartmouth, started starting my company,
Peak Capital, and really had theidea to start the firm. The
first house I bought was at duplexand duplex on a lake in Connecticut,
and my tenant, the runt thatshe paid was more than enough to cover
(03:23):
all of my costs to live there, and so we lived there essentially for
free. And I thought, thisis a great this is a great business
model, but I didn't love sortof being the maintenance person and doing all
the work myself, and so Ithought, you know, I really need
to scale this. So that wasthat was the initial idea for PEAK.
So I met I started PEAK withtwo partners, Jamie Dunn and Jeff Birningham.
(03:46):
I met Jamie at business school.He was at Wharton at the same
time I was at Dartmouth. Andthen after we graduate, I called him
and said, you'll start a firmto buy multi family and we graduated um
in two thousand and six, andit coincided pretty well with the start of
(04:08):
the real estate recession. It wastwo thousand and six, two thousand and
seven. I think it was prettyobvious to most people. We were in
a pretty massive real estate bubble,and yeah, I called Jamie and just
said, hey, let's let's starta firm to buy distressed real estate on
the back of this. So twothousand and seven, you know, we
(04:30):
underrote a bunch of deals, butjust didn't find anything that we felt.
Everything felt really expensive in two thousandand seven, so we didn't buy anything.
Two thousand and eight, we reallycouldn't buy anything. The markets were
just frozen. I think I thinkif we were had been a more established
firm at that point, we probablycould have gotten some transactions done, but
we just didn't have the broker relationshipsand the lending relationships that we have now.
(04:57):
So two thousand and nine was theyear that we bought our first department
complex. That year obviously a greattime to be a buyer. And then
since then we've acquired over two hundredapartment communities, over forty thousand units,
you know, cross like twenty fivestates, focused mostly I would say,
on the Smile States Washington, Oregon, down through the Mountain West into the
(05:21):
you know, sun belt, Texas, and then into the southeast. It's
been a great business last ten years. We've we start our own management company,
Peak Living, about seven years ago, and so today we self manage
all of our own properties, andwe've sold a lot of properties in the
(05:43):
last few years, but today weown just under thirty thousand units. Yeah,
it's been it's been a lot offun the last ten years. Quite
quite a run. So take mebackwards a little bit. So you you
go to undergrad and then you goto graduate school, and so this is
essentially is this did you have anyprofessional experience in between or during school or
(06:03):
was this really your Were you buyingproperties these single family homes is kind of
your your main gig. So Iworked between undergrad and graduate school. I
worked for a venture capital firm forabout five years, and then I was
buying. As I mentioned, Ibought a duplex and then I started buying
(06:23):
more. So I was buying justkind of duplexes and four plexes with my
own money all during that time.So that was about a six seven year
period. Bought properties in Connecticut,New Hampshire, Vermont. So I was
living out there in Utah, sothat that was really the base of my
experience. I was just buying somany smaller rental properties with my own money.
(06:46):
And then, um, you know, when I left business school,
decided to really scale it up andyou know, buy bigger properties, raised
third party capital, and and reallygrow up a big business out of it.
And then you clearly have done that. Jeff and Jamie are co founders
in the Peak Capital business. DidI hear you, Crickly you met them
in school or did you know themprevious? And then how did you guys
(07:08):
divide and conquer the roles and responsibilitiesassociated with scaling an enterprise. Yeah,
so Jamie and I met. Iwas at Darmouth US at Wharton, there
was a there was a networking groupfor BYU students who were going to business
school out east, and so Imet him through that. All the all
the business schools out there at Harvard, Wharton, you know, Yale,
(07:30):
Dartmouth, we'd all get together acouple of times a year. There's a
group of like sixty of us.So I met him through that group.
Jamie and Jeff had actually been friendsat undergrad at BYU. They also both
went to BIU for their undergraduate education, and they were both a couple of
years younger than me, so theyI didn't meet them at BYU. They
(07:54):
graduated a couple of years after me, but that's how they met and then
they just stayed in touch. Jeffafter graduating undergrad he started a couple of
different technology companies, and Jamie workedat Baine before going to business school at
Warden. So, you know,in terms of dividing and conquering roles and
(08:16):
responsibility that I think with a startup, you know, everyone sort of does
everything. In the initial years,Jeff burning him led out more. I
would say on on equity fundraising.Jamie and I both had some real estate
experience, so we let out moreon acquisitions of properties, and then within
(08:37):
a few years it evolved to apoint where Jamie and I were I would
say co CEOs P Capital, althoughwe never had that title explicitly. And
then Jeff burning Him, who wasspending most of his time doing venture capital,
that was kind of where his backgroundand really interests lied. And so
(09:01):
a couple of years after forming PeakCapital, we launched a venture capital fund
called Peak Ventures and Jeff Burnham reallyspearheaded that, and that firm has since
grown. We've raised about one hundredand fifty million to invest in seed stage
technology companies here in Utah, butthroughout really the Western US, California,
(09:24):
Colorado, Arizona. So Jeff withina few years really whose main focus was
on Peak Ventures, and then asI mentioned, Jamie and I until recently
have kind of operated as co CEOsof Peak Capital. Jeff, where did
the name Peak right? How didyou guys come up with that? Yeah,
(09:45):
that's a good question, Doug.We considered a lot of names.
You know, our offices in Provo, it's right at the base of some
big mountains and if you look outof our window, you can see,
you know, a mountain that's almosttwelve thousand feet high, So you know,
we were sort of in the shadowof those peaks, and so that
(10:05):
that's where the name came from.Just the mountains around us. Very cool.
So with regards to the two businesses, so you have the you have
the Peak Capital business, an integratedmulti family investment manager, and then you
have the Peak Ventures business. What'sthe overlap between the two? I mean,
other than clearly the founders and Iguess the passion of one of the
(10:26):
founders, how do they interact withone another? Yeah, it's a good
question. So some of our investorsare consistent between the two companies, So
that's one area where they overlap.And then we do you know, one
of our folkses at Peak Ventures,and we actually rebranded that firm a few
(10:48):
years ago to Album Ventures, mainlyto differentiate it from the real estate business.
But one of the folks is atAlbum Ventures is real estate technology,
and with our portfolio of multifamily obviouslywe can test and try out products before
we invest in the companies. Sothat's been an area you know, that's
(11:11):
been I think pretty interesting. Andin one example I'll give you, there's
a company called fire Avert. Theyproduce a product that essentially it connects to
a stove, either an electric orgas stove. If the smoke alarm goes
off, it can hear that andit will shut power or gas to the
stove. Eight percent of fires inthe US or cooking fires. Any any
(11:37):
multifamily owner will tell you that theyhave fires with some regularity, and most
of those are caused, you know, by a tenant leaving you know,
something on the stove and forgetting aboutit. So, you know, Firevert's
a company that approached us as apotential customer, and we ended up making
an investment in the company through PeakVentures and becoming a large customer. We've
(12:01):
also you know now introduced that productto a lot, you know a lot
of our partners and friends and competitorsin the industry. So it's just one
example of kind of how the twofirms work together. But the reality is
that I would say, I meanAlbum Ventures is has a very different mandate
from from Peak Capital. It's focused, you know, as to invest in
(12:22):
early stage tech companies in Utah,whereas Peak Capital is you know our mandate
is to invest in multi family throughoutthe country. Jeff, I'm curious about
the fire avert product there, socan you give a little more detail like
when it was founded, when youguys invested in what series round it's in
(12:43):
now and kind of where it standsfrom evaluation standpoint. Yeah, it was
started by a firefighter actually in Provo, Utah. He had gone all these
fires and he realized most of thefires were caused by you know, food
burning on a stove, and hethought, there's got to be an easy
way to solve that. And there'sthere's a variety of products out there that
(13:03):
you can attach to the hood abovethe stove that will spray like a chemical
down on a cooking fire. Butthe reality is those don't put out the
source of the flame, which isthe heat from the stove. So he
came up with this device that connectedthe stove. It could hear the smoke
alarm. If the smoke alarm goesoff, it would just shut power to
(13:24):
stove. And we did a lotof test into this. We would put
like a pan of oil on thestove and turn on high and let it
start to burn, and in everycase, the Firebert would stop the fire
from from actually starting. So whenhe approached us, he had only sold
(13:45):
like a few hundred units. Wehave rolled it out to all of our
units, so you know, we'veacquired over forty thousand units. We've introduced
it to a lot of our youknow, fellow owners. So like I
know Bridge in Utah uses fire,there's a number of large companies that our
customers now. So I don't knowexactly the number of units he's sold,
(14:05):
but hundreds of thousands. I believehe's in home depot or low So there's
a retail channel. Also, wewent on Shark Tank actually with fire Her,
which was a pretty fun experience.Didn't end up getting a deal done,
but it was good marketing for thecompany, and you know, we
(14:26):
did I try to remember how much. I can't remember how much we invested,
but we did around and then thecompany has not raised a subsequent round.
They've they've been able to just growand fund operations through product sales.
So they're doing really well. Peterwho started the company is still the CEO.
They're continuing to grow kind of twentythirty percent a year. It's a
(14:50):
great story that is so in termsof the business focus. I mean,
so look, I mean you saidit best. I mean the timing,
you know, to raise money andthen eventually start to blowing money and buying
your first complex of multi family apartmentsin two thousand and nine was you know,
it would be an understatement and sayit was good timing. It was
an amazing timing because I remember comingout of the what we're I guess we're
(15:11):
now calling the Great Financial Recession,the financial recession, I guess is what
we're calling it now, because thatwas in anyway, looking backwards, I
think we all thought that was theworst it could get. And and then
you know, March and April weretough months, but so you had a
great run up because property values,you know, there was a return,
(15:33):
borrowing costs went down, you knowover the course of you know the course
over the course of the last elevenyears. And we've seen a great deal
of asset pricing inflation. But youknow, have you looked at, uh
investing in other asset classes. Imean, you have a I mean I
believe I don't know what your accountis now, but I know you're you
know, up there in terms ofthe largest owner operators in the United States.
(15:56):
But have you looked at you know, Bridge as an example, you
know, they're right there in Utah. They have a diversified business. Have
you looked at other product types?Yeah, it's it's a good question.
Obviously we have the venture fund,so that's you know, then that's become
quite a large business. We're thelargest seed stage venture fund in Utah and
are very active throughout the Western US. We started a subsidiary company several years
(16:22):
ago called Tunbridge Peak in that companyand it's run by a different CEO again
in Matt mcconky, and it investsin self storage and assisted living and memory
care facilities. So we do havequite a large investment in those two industries,
and we've talked about other industries inthe past. I think one of
(16:45):
our you know, one of ourguiding principles has always been to focus.
Because you get good at something,I think there's the temptation to feel like
you can be good at anything,or you know, good at other sectors
within real estate, and so oneof our core theses has always been just
to really focus on multifamily and Ithink that served us well. You know,
(17:08):
we've we've been able to do reallywell, and it's such a big
industry as you know that. Youknow, even though we're in the top
you know, we've been in thetop fifty owners in the last several years,
there's still a lot of room forus to grow. So, you
know, bottom line is, Ithink will continue to focus on multifamily and
just continue to grow the portfolio.Where do you so, where do you
(17:32):
see the business going? I mean, thirty thousand units, you've you've now,
I mean, I believe, ifI'm not mistaking, you were third
party managing and you just said,I think you're you're internally managing assets.
Now do you have a you doplan on building buildings or continue to buy
existing assets? Yeah, well,I would say, you know, we
want to continue to grow the portfolio. So as you guys know, we've
sort of looked all over and Ithink one of our guiding principles the next
(17:57):
ten years will will be to consolidatemore in the markets we really like.
So, you know, markets likeSalt Lake, Denver, Phoenix, Dallas.
We're going to just try to consolidate, build our presence in those some
key markets more. You know,our management company is doing a great job.
Will continue to grow that we're aboutsix hundred people now in that company.
(18:21):
You know, we've moved more Iwould say, from value add to
kind of core plus bigger assets overthe last several years. I think that's
a trend that will continue for us. We've done some big portfolios. We
just closed a twelve property portfolio NorthCarolina earlier about a couple weeks ago.
So I think you'll continue to seeus kind of buying bigger portfolios, which
(18:45):
just more efficient for us than buyingone off properties. And you know we've
done historically, we've mostly done acquisitionof existing properties. We have done a
few ground up developments. We're actuallylooking right now at five ground up developments,
four in Texas and one in Idaho. It's getting so expensive to buy
(19:10):
existing now that if you can findthe right partners that bought land you know
earlier in the cycle five seven yearsago, development is starting to starting a
pencil better and make more sense.So I think you'll see us do more
developments in the coming years. Butyeah, it's really it's really just kind
of continue to grow, you knowwhat you know on the platform that we've
(19:33):
established, and so so other thanagain, just so I understand correctly.
Yet you have the Peak ten Bridgebusiness which is seniors self storage and I
think one other product type, butI believe you guys have done a quite
a bit of volume on the seniorside through that business. And then you
have the conventional multi family business throughPeak, and then you have the album
business which is venture. And soyou all are you and your two partners
(19:56):
are called the code either the soulGPS or the COGPS of those three businesses.
But there's an operator that runs thosebusinesses. And are you the CIO
for all three or just this business? Yeah, I'm the CIO for just
Peak Capital. So about three yearsago we promoted Chris Manning to be CEO
(20:18):
of Peak Capital and then gentleman namedSue croman Hook runs Album Ventures and he's
got a team of four or fivepeople that help him run out business.
And then we've got Matt mcconky whoruns the Tunbridge Peak. I'm CIO ver
just Peak Capital, but I'm youknow, I'm heavily involved in an album
and Tunbridge Peak. Do you allhave a specific management you know, kind
(20:42):
of management style or management philosophy?You know, there's different programs out here
that you can follow, and soI was just curious, do you do
you have one or did you guysformulate your own in terms of the way
you are operating your businesses in termsof the management format do you mean the
software we use or more like themanagement of philosophy? Yeah, the management
(21:04):
of processes? So like there's uh, I think we've been recently, we've
been going through the book Traction asan example. You know, there's a
donnaher model. There's a bunch ofdifferent models that you can find. The
Gazelle model, I think is anotherone, but there's a bunch of different
models you can follow as to howto how to scale an enterprise. I
mean, the Koch Brothers have amodel as well, and read I read
(21:25):
their book a while ago. Haveyou created your own way to manage and
scale a business through experience or haveyou leveraged some of those existing management philosophies
and models that folks have written booksaround. That's a good question. I
would say. Our core strategy hasbeen to hire really experienced, you know,
(21:47):
people who have come from big organization, big organizations, you know,
so we've hired from like Great StarAlliance, so people that kind of grew
up in those management structures and learnedthere and then brought what they learned over
to Peak Capital and then, youknow, early on, I wouldn't say
there was like a specific book thator a specific style that we necessarily have
(22:11):
built on. We've you know,we've read a lot of those books would
incorporate a lot of those ideas.I would say that the main thing we
did early on this and this islike two thousand and eight, two thousand
and nine, was meet with alot of the large multifamily owners in the
country and get to know them,you know, Like one example is Bob
(22:33):
Hart of True America, who's afriend, you know, friend of mine.
So people like that who had beenin the industry for a long time,
had had lived through, you know, multiple cycles. We're in the
top fifty multifamily owners, and reallyjust sit down with them and say,
you know, how did you scaleit, what did you do well?
What things would you change if youcould do it all over again. And
(22:56):
we were having those conversations when weown one property or two properties, So
I think that was really for us. The key is trying to learn from
those, you know, the otherowners in the industry that came before us
that had built firms the size ofwhat, you know, what we wanted
to build, and then try toscale it, you know, based on
(23:19):
the advice and recommendations they were givingus. Who gave you the best advice?
That's a good that's a good question. The best advice you can You
can maybe say, well, maybeI don't need to call you out,
but maybe you could tell us whatwas the best advice you got? Probably
the advice I don't know if it'sthe best advice, but the advice that
(23:41):
has sort of resonated with me andhas held the most true the last ten
years was advice that I got.Is basically that like scaling your firm is
sort of a stair step process.So it's not it's not linear, it's
not geometric. It's more of astair step where you grow in a linear
(24:03):
way from one to twenty properties,but then at twenty properties it's an entirely
different firm and structure than it wasat one. And then that is true
again when you go from twenty tofifty properties, and fifty two hundred properties
and one hundred to two hundred properties, and so you know, it's anover
(24:26):
a clean I think we're always lookingfor like a clean linear path or a
structure, like a one size fitsall structure. And the reality is,
as you grow, you've got tocontinue to reinvent yourself in your systems and
your people. Some of your peopledon't scale when you go from twenty to
one hundred properties. And so thatwas advice that I got early on.
(24:49):
I didn't quite understand it, franklybecause I hadn't lived through it. But
none of that, it's lived throughit. It's you know, it's something
that I've found it be true andhas helped who's helped me and our firm
as we've continued to grow. Iwould agree with that. I mean,
that's been my experience as well.I mean, it's a yeah, I've
explained that as well to some ofthe folks that have worked with me in
(25:11):
the past. The concept of uh, you know the step ladder or stairs,
you know, the step growth modelwhere you go up, you flatline
to absorb what you've what you've accomplishedor acquired, and then kind of re
envision the path forward for the nextflurry of growth. And so for you,
what's been the most I mean,so you know, you know,
(25:33):
you know they say the first millionsthe most difficult, and then you know,
then you get to twenty and thenthe hundred whatever. You know,
in terms of like net worth,the way people explain the acquisition of net
worth, but in terms of scalingyour business, what was the most difficult
part in the journey? You know, if you if you're gonna go,
if you look back and say,Gali like that was that was really hard?
You know, that's that's that Whatwould you say would be the step
(25:56):
that was the most difficult for you? And why? Yeah, I think
the hardest thing at every level,it's the hardest thing. It's also the
most rewarding thing is just having theright people in place to be successful.
Because when we were when we ownedone or two properties, Jamie and I
could do everything, you know,for the most part, but when you
(26:18):
get to twenty you've got to bringin additional people and fifty and one hundred,
and so I think that's been themost challenging, but also the most
rewarding is first just finding the rightpeople and then training, motivating them,
making sure you have the culture setup correctly so that everyone's working toward the
(26:41):
same goal. That's also been themost rewarding for me because I look back
now, we've got an amazing team. We've got great people in each of
the key roles, and you know, we have you know, close to
six hundred and fifty employees today andso to just think about that I get
to work with them. I wasjust in Atlanta actually yesterday with twelve of
(27:03):
our people, you know, justthe opportunity to work with them, knowing
that we're providing a career in asafety and security for their family. That
that's just a great feeling. It'sback when we had two employees. I
knew I wanted to grow, butI don't know if I, honestly,
if I ever thought we would have, you know, six hundred and fifty
(27:23):
employees. So that's been a reallyexciting thing for us. How have you
gone about recruiting the best talent?You know? Because you know, I
agree with you, you're only asgood as your bench right, so you're
only in my mind and experience.You know. The success that I've achieved,
and Doug would say the same,I'm sure has been because I've been
(27:44):
able to scale right, scale myself, scale my efforts, scale my focus.
And you're only as good as thefolks that you surround yourself with.
And so how have you gone aboutacquiring, you know, the best talent.
You clearly said you've looked at recruitingout of larger companies that people that
have kind of done it before.But more granularly, are you guys using
headhunters? Are you approaching them yourself? Are they coming to you? How
(28:07):
do you how do you get thebest talent? Yeah, it's it's all
those methods. I mean, wehave used headhunters. I would say we've
had some success with that. Infact, our CFO came through a headhunter
and he's been fantastic. But mostof our hires have come just through relationships,
(28:29):
and it's been people that you know, maybe we met. So we
were working with Alliance early in ourgrowth, and we met people at Alliance
who you know, we really connectedwith, who did a great job,
and so you know, we hiredthem at some point. You know,
Jamie I met through business school.Chris Mann and I met through business school.
So it's been a lot of personalconnections and personal networks, you know,
(28:52):
as we've grown some of our teams, you know, and this is
true of our construction management team andours set management team. You know,
we've just gone to ours. Aswe've needed to add people, We've gone
to our team members and just said, who do you know out in the
industry. That's great and we've foundthat to be very successful and a lot
(29:14):
of you know, asset management andconstruction management in particular, our teams are
all people who have kind of knowneach other and work together in various capacities,
you know, for ten, evenfifteen, twenty years. We also
one thing I will mention too that'sbeen very successful for us, and I
think I would recommend it to otherfirms is we have an internship program.
(29:37):
We draw mostly from BYU because Biusyou know, a couple of miles down
the road from our office. Butwe interview and bring in, you know,
twelve to fifteen interns each year.Most of them are typically financed or
accounting undergraduates, and then really forus and them, we have sort of
(30:00):
a three to six month interview processwhere they're working for us, they're getting
experience, and almost all of ouranalysts, associates, many of our acquisition
deal leads, some of our youknow, people in other areas asset management,
construction management, have come through thatinternship program initially, and even interns
(30:23):
who we haven't hired, I thinkit's been very beneficial for them because they've
gotten experience on their resume that hasallowed them to go on. And we've
had, you know, former internsthat have gone to work for Bridge,
Wassatch, Hines, Gray Star.So I think it's been a really you
know, beneficial program for us andfor the interns. So I would recommend
(30:45):
that for for any you know,any companies that don't have an internship program.
Yeah, Jeff, it sounds likeAri and I are doing something right
or Grace deal is because we've hireda lot of our talent the same way.
Most of the analysts that have comethrough our office, who a lot
of those have eventually become producers,came through our internship program. So I
(31:10):
couldn't agree more. And then goingback to the team analogy, I just
interviewed somebody here in our office,and I grew up playing sports, and
I love just kind of the teamenvironment and being able to kind of raise
everyone together because you know, we'rebetter as a sum rather than individual parts.
So when I see people with sportsbackgrounds and things like that, that
(31:33):
really resonates well. With me.Do you guys look for something in particular?
Did you play or watch a lotof sports growing up? Yeah,
I was really active in sports,and yeah, sports is definitely a focus
area for us. Jamie and Iboth ran competitively across country and track,
(31:55):
and then Jeff actually played college basketball. So that is something we look for.
It's not, you know, anabsolute criteria, but you know,
if we see somebody that has stronghigh school or collegiate sports background, that
that's definitely a plus in our minds. Well, it's a very competitive business
on every level too, so Ithink that competitive nature translates well into a
(32:20):
commercial real estate no matter what capacity, right, principal side, acquisitions,
brokerage, lending, etc. Yeah, I totally agree. Yeah, a
lot of our team played you know, college football, college soccer, so
that's that's something that we've tried tofoster. So pivoting real quick with COVID
(32:40):
going on now, when we kindof last caught up a few weeks ago,
you said that you guys are asactive as ever. How many deals
are you on pace to close bythe end of the year, And I
mean, what are you just kindof seeing differently now compared to you know,
the previous four or five years thatyou're you're still getting a lot of
business done. Yeah, So wewill close between thirty five and forty acquisitions
(33:05):
this year. A few will probablyyou know a few of those will may
slip to next January. So that'swhy the range. But that compares very
well with last year and the yearbefore. I think we did thirty acquisitions
in two thousand eighteen and like thirtyfive ish in two thousand nineteen. You
know, it's getting harder. Imean, there's plusses and minuses. We
(33:30):
love where debt rates are today.Obviously there as low as they've ever been,
but that's also driving down cap ratesand you know, price per unit.
I was I was making this commentactually yesterday I was you know,
I was in Atlanta. I rememberbuying you know, good b product in
Atlanta for forty thousand a unit,and then it was sixty thousand, and
(33:51):
then it was eighty one hundred,one hundred and twenty. Now now be
product in Atlanti's trade and at youknow, one hundred and forty two hundred
and sixty thousand units. So overthe last ten years we've just seen that
kind of steady increase as cap rateshave come down and debt rates have come
down, and construction costs have goneup UM. But you know, we're
still finding good deals. There's stillI wouldn't say there's a lot of distress
(34:15):
out there, but there's definitely stillundermanaged properties that we can go in and
and improve and grow ni UM.There's still a little some value add deals
that we're finding out there. There'ssome interesting court plus deals that are just
good real estate that you know,we're just excited to own for the long
(34:37):
term. You know, COVID hasbeen it's been a challenge. I would
say we were very scared in Marchjust about what COVID would would mean for
us and our portfolio when you're lookingat you know, when the economy was
shutting down and you're we're looking atthe unemployment levels that that we were and
(34:57):
still are seen. I think thefederal restrictions and state and some state restrictions
on evictions has been challenging for usand a headwind. But I would say
despite all that, and this ispretty consistent across all the industry peers I
talked to, you know, we'vebeen able to collect you know, ninety
(35:17):
five percent of normal or ninety fivepercent of what we've built across our portfolio
pretty consistently since March, and ouroccupancies frankly are as good as really they've
ever been. You know, wehave across our portfolio have our higher occupancy
today than we did back in February. So, you know, COVID's been
(35:38):
a challenge operationally for our teams.It's been a lot of work. We
have a weekly task force call justto discuss and you know, work on
COVID related issues. But all inall, I would say, you know,
we're happy with how the year hasprogressed, especially relative to kind of
what our fears or concerns we're backin March. If you look into twenty
(36:01):
twenty one, what do you whatdo you see? What do you see?
If I were to you know,what do you? No one could
predict the future, but what doyou think is going to happen in twenty
twenty one as it relates to theenvironment. And then and then you're you
know how that may affect you inyour investing thesis? Or are you or
are you just quarter by quarter likewe all are. I'm just curious how
you how you guys see it andwhether or not, you know, the
(36:23):
politics or the virus or any ofthat impacts you know, kind of your
your ongoing strategy. Because I agreewith you the worst of it was in
March and April when the world shutdown and we weren't sure what this thing
was. And today I think wehave a better understanding of what it is.
But we're certainly not out of thewoods. That's right. Yeah,
there's so I would say as faras the election goes, you know,
(36:45):
and you guys are seeing it,there's there's definitely sort of sellers out there.
They're panicking around the election and tryingto sell properties this year. That's
not us, Like, you know, I think things will be different um
under a you know, would bedifferent under a Biden administration versus Trump.
But I think regardless of who wins, this will continue to be a great
(37:07):
area for investment. And there's stilla lot of demand, a ton of
demand for multi family housing relative tothe amount of available supply. So we're
bullish on the industry for the longterm. The two areas we're really tracking
closely right now. One is COVID. I think every month that goes by
(37:29):
without a vaccine and without the economyopening back up, it gets harder and
harder for our tenants to pay rent, and we've seen that in our numbers.
I mean, we've been pretty consistent, but I think you know,
if we don't have a vaccine untilthe end of twenty twenty one, if
the economy stays somewhat closed, youknow, through the next spring or summer,
(37:52):
that's gonna be hard for all ofus, but it's going to especially
be hard for more of our kindof low income tenants. And so we're
definitely watching that closely, hoping wecan get a vaccine, hoping we can
get the economy kind of back open. That'll be good for everybody, but
it will be especially good for thelower income tenants who you know work in
(38:14):
service industries, you know, retail, restaurants, hotels, etc. So
obviously I can't predict that, butwe're hoping that we can get back to
normal as soon as possible there.And then the other area we're watching,
I know it's been a big topicof conversation is just um, you know,
call it climate change or call whateveryou want, but you know,
(38:37):
insurance rates this year are spiked dramaticallyin our industry, and we are seeing,
you know, and I don't havesort of scientific data necessarily to back
this up, but we're definitely seeingan increase in storms, especially along the
Texas Golf and through the Midwest.And you know, we have more claims
(38:59):
this year than we've had in years, and it seems like every year it's
getting worse. And so for usas an owner, we're really starting to
think about like what markets do wewant to be in, and really trying
to focus on markets where we don'thave the climate related changes, climate related
issues that we're seeing, especially atTexas Golf and kind of up through the
(39:22):
Midwest. So that's kind of makingus look even harder at markets that we
already liked a lot, but focusedmore on. I would say going forward,
markets like Salt Lake, Denver,Las Vegas, Phoenix that just don't
have just don't have the weather relatedissues that we're seeing in other parts of
the country. That makes sense,Yeah, I mean, we've seen insurance
(39:45):
costs, I mean across the boardrise, and I think in an environment
where it's very difficult for the insurancecompanies put out cash and generally yield,
I think we're going to continue tosee that paradigm shift with cost rising for
insurance and actually eating eating at youyour earnings. No matter the type of
business that you're you're operating, youknow, if you're at risk of you
(40:07):
know whatever it is, flooding,tornadoes, hurricanes, earthquakes. Um,
So I think, I think,Doug and I see that too. Well,
that's I mean, I look,I appreciate you sharing with us your
story. I mean it's really inspiring. I mean, you guys have built
an enduring enterprise. You know,it's a it's a big business. You
have a great reputation. We've enjoyedworking with you, and it's very interesting
(40:30):
to see the other businesses that youguys have invested into. The reason i'd
ask you the question round management style, if you will, is because it's
not easy to build these things,and you all have built three of them,
and they're all making a mark intheir respective industry niches. So I
guess that what I would ask youon a closing note is, you know,
if you were to go back,you know, and into your early
(40:52):
twenties again, right, I meanyou you launched your business five years out
of essentially at a school, rightout of grad school, what would you
tell yourself the young you in termsof like a redo, like what would
you what's the advice you to giveyourself. Yeah, it's a great question
this time. We've actually talked aboutquite a bit, and I know my
(41:13):
partners feel the same way. Andthe advice is, you're like, just
enjoy the ride more like celebrate thesmall successes along the way. You know,
my partners and I are so typeA, we're so driven, we're
so like goal oriented. You know, early on we had a goal to
own fifty thousand units. We're closeto achieving that goal. But what we
(41:35):
haven't done well is we haven't enjoyedthe ride, Like we haven't like celebrated
the small successes along the way.We're starting to do that more. You'll
last few years. But that'd bea piece of advice I would give myself
or give anyone, because it's ahard as you said, it's hard to
build a business and you can reallyburn yourself out, you know over you
(41:57):
know, try and grow a businessif you're not kind of enjoying the ryde
and celebrate and the successes along theway. So I know that's that's sort
of soft answer, but that that'shonestly, you know, one of one
of our regrets is that we didn'tdo that. More so, stop to
smell the roses in the middle andthe climb up the mountain to get to
the peak. That's right. Yeah, it's Stu Covid. We missed a
(42:22):
comment. Yeah, especially now morethan ever, it's like, just enjoy
the small good moments each day makessense. You know. Look, I
it's impressive what you guys have felt. Like I said, you know,
we're you know, we're rooting foryou. You're running a you're running a
good business, and and we hopethat that the success continues. And we
(42:44):
appreciate you jumping on today and hopefullythe folks that are listening to this podcast
glean some value from your wisdom andyour experience. So we thank you,
Jeff, No, thank you.I appreciate the opportunity and you guys,
Doug are you and your your wholeteam that you've been great partner to us
for a long time and we reallyappreciate that partnership and uh, you know,
(43:05):
look forward to doing a lot alot more work together in the future.
Absolutely, absolutely, thanks Jeff,Thanks guys, Thanks you guys.
Take care, Jeff, take care
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