Profession/Title: Financial Portfolio Manager

Company: Thackeray Partners

Date of Interview: 10/06/2017

My fourth informational interview was conducted with Joe Chu, financial portfolio manager at Thackeray Partners. Thackeray Partners is a real estate firm that manages private equity funds, provides financing for real estate properties, and invests funds in different real estate all over the country. Mr. Chu is an asset manager in charge of managing the portfolio for around 30-35 properties as well as making strategy decisions. He graduated from the Wharton School of Business at the University of Pennsylvania with a BS in 1998 and a MBA in real estate in 2007.

From my interview session with Mr. Chu, I was able to learn a lot about investment strategies that investors use when searching for properties. Firstly, Mr. Chu described that Thackeray was different from other real estate investment companies in that they’re able to deploy different strategies throughout the business cycle. They utilize regular acquisition and assume ownership over properties, develop new properties and generate funding, or use a value-added approach in which they redevelop existing properties. While discussing different real estate investment strategies with Mr. Chu, I was curious about the approach investors take in analyzing market trends before purchasing assets. Mr. Chu then explained that firstly, investors don’t and have no way of knowing the future perfectly. However, they use certain trends that have proven to be helpful such as seeking investments in areas with high employment growth and a fast-growing job market. In addition, they also look at specific demographic trends such as the rising trend of decreasing home ownership as millennials have shown to favor apartments over houses. Another strategy that Mr. Chu mentioned was staying disciplined in that the investor must not follow the herd. This piece of advice reminded me of the saying by Warren Buffett to “be fearful when others are greedy and be greedy when others are fearful.”

Moreover, I asked Mr. Chu what he believed to be “red flags” when searching for properties to invest in. He explained that when purchasing assets, one must first determine if they are paying above or below replacement cost. This means that an investor should not pay for a property if the price is higher than the price it would cost to build the same property from the ground up today. Mr. Chu also stated that investors who are new to the world of real estate should start small and find properties that are not difficult to execute plans on. This would downsize a lot of risk, making it easier to begin building a positive track record. In addition, it’s very risky to cross deals (when an investor uses the same firm to finance deals) because if one transaction defaults, then the same bank can assume ownership of other assets as well. Mr. Chu also emphasized that real estate is truly a small world in comparison to other industries so acting with integrity is important because reputation is important. Lastly, I learned that it is possible to start out with no capital because good deals will find capital, eliminating the need to provide all money upfront.

Ultimately, I’m grateful for my opportunity to meet with Mr. Chu and learn about the investment side of real estate. It was extremely useful as investors are oftentimes the ones that provide funding for development projects and purchase completed properties. Therefore, learning the perspective of real estate from an investor’s eye is invaluable as investing is another way to break into developing because the same market research is necessary for both specialties. As I continue on with my journey in ISM, I’m now more knowledgeable and aware of financial investing in relation to real estate.

Joe Chu