Q&A With Gabriel Silverstein, Managing Director, SVN | Angelic/Chair of SVN Institutional Capital Markets
Work in commercial real estate for any length of time and it’s inevitable you’ll hear the name Gabriel Silverstein, if not meet the man in person. Silverstein, who currently has a dual role, serving as both Managing Director of SVN | Angelic, his own commercial real estate brokerage based in Austin, TX, and Chair of SVN Institutional Capital Markets, has been a high-profile fixture in the industry for 25 years. With over $7 billion in transactions and $1 billion in tenant representation work to his credit, the charismatic and distinctively stylish Silverstein has had a long and extremely successful career that has taken him from the University of Notre Dame to London to the bright lights of New York City and Chicago and now Texas.
An rDCF client and ardent fan of our game-changing transaction underwriting software, we managed to catch up with the ever-on-the-go real estate executive to discuss his career, some of his more noteworthy projects, why he uses rDCF and his thoughts on COVID-19 and its impact on commercial real estate and our country’s economy.
Q: Twenty-five incredibly successful years in commercial real estate this May. Congratulations! How did you get your start in the industry?
A: I graduated from the University of Notre Dame with degrees in Finance/Business Economics and Computer Applications. Right after school, I went to work in investment banking, where one of my contacts talked me into becoming a commercial real estate analyst on the investment banking side. My work exposed me to the industry; I fell completely in love with it and never looked back.
Q: Why were you so drawn to commercial real estate?
A: What really attracted me is the ability to be unique and creative, but also be in a position to put together meaningful deals. I see commercial real estate as our largest unregulated asset class, and because it’s less regulated, there’s enormous room to come up with creative, out-of-the-box solutions to accomplish your objectives while also generating volume. It’s the best of both worlds- creativity paired with business acumen- and I liked that balance from the very beginning.
Q: Can you give me an example of a recent high-volume deal that was both meaningful and creative?
A: We recently closed an $84 million deal for a large healthcare company that will save them $3 million annually on their rent. Given the COVID-19 outbreak and the critical need for healthcare services, it’s nice and very meaningful that this company can focus more on caring for people and less on paying the rent. The transaction involved an acquisition, bifurcating the land from the building, structuring a very unique lease to drive a 100% financing, and doing all that through a charitable organization that will ultimately donate the building back to the tenant when the loan is paid down to zero.
Q: You currently serve in two main roles: you’re Managing Director, SVN | Angelic as well as Chair of Institutional Capital Markets for SVN. Let’s start with SVN | Angelic. Where did the name come from?
A: We formed Angelic Real Estate nearly 16 years ago. Just prior, we had a Grand Prix sailboat racing team based in Chicago named Angelic, named after my husband, Angel. When we started working on a name, logo and brand for our new company, we realized we already had all that from our sailing team and so Angelic Real Estate was born. When we joined SVN three and a half years ago, we kept the Angelic brand in combination with SVN.
Q: Why did you choose to partner with SVN? There are a lot of brokerages out there and with your reputation and industry contacts, any of them would have been thrilled to have you.
A: SVN are currently the #6 brokerage in the country. I saw it as an opportunity to grow an already well-respected brand into an area they weren’t focused on at the time, namely institutional capital markets. It was a chance to break new ground for SVN and add value, and it worked out even better than I imagined. From the start, the support from Kevin Maggiacomo, our CEO, and the entire SVN senior management team has been tremendous. That combined with SVN’s collaborative culture has made a huge difference. We weren’t looking to join into a larger brand again, but the fit was perfect, and that is all about the SVN culture.
Q: Tell us a little something about SVN | Angelic. You’re based in Austin now?
A: Yes, SVN | Angelic is based in Austin, TX. There are currently five people on our direct team, in multiple states, plus we have the support and market coverage of 1,700 advisors in over 200 offices in the US alone. We work in all property sectors and as part of SVN we have the skills, experience and resources to provide any service a buyer or seller could want. Our specialties include investment sales, debt and equity financing, credit-based financing, plus build-to-suits and sale/leasebacks. We do a lot of work helping developers win deals and line up financing, and when the project is completed, sell the property.
Q: You’re very active in the CRE community. You’re on the SIOR Board of Directors and a former chapter president. Are there any causes outside of CRE that you’re involved with?
A: Angel and I are staunch supporters of our country’s armed forces and several organizations that support them. Our country is so incredibly fortunate to have the freedoms we do, and we wouldn’t have those freedoms if not for our military veterans. In addition, SVN | Angelic has been heavily involved in the financing and construction of nine VA clinics in the last five years. Three have been completed and sold, the other six are under construction now, with more to come. We’re extremely proud that we could be part of the effort to build $400 million in clinics to provide healthcare to the people who protect our country and ensure our freedoms and way of life. We have also been a long-time supporter of the Robin Hood Foundation, and its mission to fight poverty through education and other programs, each strictly monitored and measured for tangible proof of results. Capital market discipline powering social good.
Q: Let’s talk software. You’ve been using our rDCF valuation and transaction underwriting software for nearly a year now. What do you think about it?
A: I give it five stars! It’s so different than any of the other DCF software I’ve seen. For starters, rDCF is very intuitive, which makes it incredibly easy to learn and use. The interface is very clean and designed to help you work fast and efficiently. Our clients like it because they can play with the numbers in the models themselves instead of having to rely on an analyst or someone else to do the work. You don’t have to change the entire base model to sensitize variables or look at different scenarios. Plus, the output is so clear and straightforward, our clients understand what they’re seeing.
Q: Anything else about rDCF that sets it apart from the alternatives?
A: I like that rDCF is so transparent. Formulas in the models are exposed so you know exactly how the numbers were calculated. The dreaded “black box” we’re all too familiar with has been eliminated and that creates a level of comfort for everyone involved in the deal. Also, because rDCF is so easy to use, user errors are significantly reduced. Fewer user errors mean more accurate models and as everyone in this industry knows, accuracy is essential.
Q: Are you getting the level of support you need from the rSquared CRE team?
A: The team that supports rDCF has been nothing short of amazing. I haven’t had any significant issues with rDCF, but I have had questions and needed some guidance on occasion, and the team was responsive and knowledgeable, not just about rDCF, but about commercial real estate, valuation and underwriting in general. They’ve even gotten on the phone with my clients if they had specific questions about a deal or needed help with the software. It helps tremendously that the software team understands valuation methodology, so they don’t just know the technical answer of how to build the model to do what you want it to, they know how it should be built to model it correctly, so they can help keep someone from making a mistake, rather than blindly help someone model an incorrect idea. The rDCF team has small town intentions coupled with a big city approach, and that’s a powerful combination in my book. They’ve essentially become part of the SVN | Angelic team, a valuable resource to help us better serve our clients.
Q: You’ve been very gracious with your time. One last question: What are your thoughts on COVID-19 and the impact it’s having on CRE and the economy in general?
A: From a business perspective, it’s taking a terrible toll on our country’s economy, obviously, as well the commercial real estate markets, and I’m not at all in agreement with the one-size-fits-all measures that have been imposed here and elsewhere at the cost of tens of millions of people’s welfare. The effective unemployment rate may be close to 30%, double the official unemployment numbers – and remember this is less than three months from an all time record low unemployment market. Prior to the outbreak, we had the strongest economy I had seen in my career, and that changed almost overnight.
I hope we can find sensible, effective ways to open up the economy quickly, especially in the areas where there have been very few cases of COVID-19. As we start to reopen for public business, we still have people with lingering fears that have been largely fueled by misinformation, and if people are scared, not to mention uncertain of employment and income, they will also remain cautious with their consumer spending. I have great confidence in our country and our collective ingenuity, can-do spirit and drive. Our country is resilient, and the commercial real estate industry is, too. The effect of this event-driven recession will be felt very differently across asset classes in a way that we have never seen before. Most recessions are somewhat universal in hitting all sectors at once. Here we have catastrophic impact on hotels and retail, uncertain outcomes for office, storage and medical space, and yet potentially a very minimal negative effect on industrial real estate. The multifamily market will be buoyed by interest rates that will continue to go lower and lower, but significantly overreaching government actions threaten to drive investors away from some markets, very much to the detriment of the people who most need a healthy, functioning industry to provide them the most basic needs at an attainable price. Don’t forget we have a major election cycle late this fall as well!
Note: The opinions expressed herein are Gabriel Silverstein’s and may not reflect the views of rSquared CRE or their management team.