Roar of the Renaissance Man

Jim Simmons has seen it all in his career. After beginning as an engineer at General Electric, where he worked with the Pentagon, Simmons moved onto Wall Street, where he rubbed shoulders with Jamie Dimon and Sandy Weil, before moving to Harlem to help former President Bill Clinton revitalize that neighborhood. For the last 18 years, he’s been involved in real estate private equity, first at Apollo and Ares, and most recently as CEO and Founder of Asland Capital Partners. 

Asland Capital owns or controls roughly 3,400 units of multifamily across the U.S., but with a particular emphasis in buildings in Upper Manhattan and the Bronx in New York City. Simmons sat down with CO to discuss his multifaceted career in finance and investment. 

This interview has been edited for length and clarify 

Commercial Observer: Tell us about your early career — how did you get to where you are today leading Asland Capital? 

Jim Simmons: If you were to ask my mother, she would tell you it may be a love for education, and a lack of career focus, given that I’m on my fourth career, as I define it, having had three degrees, two post-grad degrees, and roles in disparate parts of the professional ecosystem. But every step was really less by planning, and more by fate. I was an engineering major in undergrad, so I started doing engineering for General Electric. It was my first job out of college, located in the Washington, D.C., area, and I worked on a lot of defense-related activities at the time, and I held high level clearances at a very young age. So it exposed me to world events, and government as a highly functioning part of the national defense apparatus. That was still during Jack Welch’s reign [at GE], so I learned traditional management in a real qualitative sense, where I got to see how a large conglomerate can operate, and at the same time understood how the federal government operates. 

I ended up deciding that I wanted to transition to Wall Street, so I got an MBA, and came back to Wall Street, specifically to Salomon Smith Barney, which had a reputation, particularly to the Salomon side of the business, as being some of the best fixed-income traders on the street. I ended up doing that for the better part of four years, and then — accidentally,quite frankly — an introduction occurred between myself and the person who was then the head of the Upper Manhattan Empowerment Zone. The CEO was a woman by the name Deborah Wright, and the chair of the Upper Manhattan Empowerment Zone was Dick Parsons and they, collectively, with the help of Jamie Dimon and Sandy Weil, convinced me that taking a leave of absence from what was then Travelers, Citi, and Solomon Smith Barney would help revitalize Upper Manhattan. What started as a one year leave of absence ended up as a four-year exercise where I was CEO for two of those four, and we did a number of interesting things [in Upper Manhattan].   

What stood out to you during  your time working in Harlem? 

It included getting former President Bill Clinton a home [and office] right in the heart of Harlem at 125th Street, so the negotiation of that process, both politically and sort of realistically, were all things that happened behind the scenes. 

We were charged with revitalizing Upper Manhattan, and I worked with the former president and his staff, in both getting him moved in and then in some of the important initiatives, which made an impact on the community. And during that period of time I realized that it was really difficult to positively effect change unless you owned or controlled, and could influence, real estate. And so that intrigued me and that led me to Apollo and Ares where I spent the better part of 17 or 18 years. 

What was so unique about real estate private equity back then? 

I was unaware of the actual model, investing on behalf of institutional investors and limited partners, generating returns, and doing so across asset classes. So the whole process of raising capital, making the investment decision, deploying capital, and then harvesting capital, and setting it back for return — I was unaware of. 

For example, my mother worked for the state of New Jersey for entire career. She retired at age 52, and her pension was managed by outside managers that invested that capital, which generates a return, and leads to her well-being the rest of her life, so that whole process of investing capital, generating returns for beneficiaries, whoever they may be, was something that I was not generally aware of, even given my time at Bankers Trust and Salomon Smith Barney. We were largely creating derivative products to sell to institutional investors, and others, who are trying to isolate risks. 

So when I got to Apollo and Ares, it educated me about that process, which told me, ‘You can invest capital, and do the same thing that I was doing in Upper Manhattan to positively affect change when you do make these investments.’ It allowed me to see the opportunities. 

How have you enacted positive change through your understanding of that system?

So here’s the theory: The theory is that if you own assets, you have the ability to operate said assets whichever way you see fit. And the business model during the 1960s, 1970s, 1980s, all the way through the early 2000s, in specific neighborhoods, is you own an asset as an individual or as a family office, you hold it for a very long period of time, you operate it as efficiently as possible, or you invest as little as possible, but you never sell, you refinance in a tax-advantage way, and you live off of a cash flow as that grows over time. And you hand it down from generation to generation. That’s the typical business model for real estate ownership, wealth creation, that goes back to when land was first acquired. 

Taking a slightly different tactic to that model, which includes maybe not running the asset as  ‘efficiently as possible’ based upon investing as little as possible, a different tactic might be, ‘We’re going to invest as much as we would invest in any asset that you would hold anywhere to make it the best product in its micro-market,’ And so, you’re going to provide a superior product, which provides a superior set of living conditions for the residents, and at the same time, professionalizes all of the aspects of ownership of that asset including property management, procurement, the use of technology. So, you’re going to get efficiencies of scale and you’re also going to get operational efficiencies, such that you’re being best in-class, and it’s going to create outsized risk adjusted returns versus the other model, which is more predicated on an individual holding an asset and generating the highest amount of tax-efficient cash flow. 

Given that, how would you describe your investment philosophy in commercial real estate today? 

In general, you want to be where there is an imbalance between supply and demand. In general, you want to be in domiciles which are improving as opposed to declining, and you want to have the best-in-class micro-market product such that you are attracting the best tenants, tenants who want to stay there, so therefore they are more likely going to pay on time and more likely going to be good stewards of the asset, as much as you are. 

In general, you want to be in places where the public side of public-private partnership is more apt to be helpful than harmful — that’s a place that you want to be more than others. So that’s a general investment thesis. 

You have worked closely with Goldman Sachs Urban Investment Group — what did that accomplish?

There was real alignment in thought and in mission there. Given the philosophy that I just articulated, it dovetailed really well with what they were attempting to accomplish the terms of deployment of their capital, which is to invest in areas which happen to be under-invested in historically, and to invest in the asset class in which we are most highly invested in — multifamily assets — and to provide the highest quality housing alternatives through buildings which are clean, safe, well-run, well-managed, and which create outsized risk-adjusted returns. 

Given the supply and demand dynamics that I mentioned earlier, these assets are fully-leased, so your risk is less because you’re not doing things like building a new building, you’re not leasing up a building, but you’re taking existing assets and you’re improving it for all the existing residents, and by the way, you’re doing it in a way in which is preserving and improving the lives of the residents who are there. So it’s a non-displacement business model where, in essence, rising tides raise all boats. So we’re investing in and improving the asset from top to bottom, and we’re not displacing people. But at the same time, if you are graduate from college in New York City, for an example, and we have a vacant unit, you may be in Northern Manhattan, which is 40 blocks north of Midtown, but your living experience is the exact same as it would be on the Upper West Side or Upper East Side, and by the way, you’re going to pay 25 percent of rent of what you’ll pay to live in one of those other enclaves. 

What have you learned about affordable housing investment and development in your career? 

It’s certainly rewarding, I will say that. Many developers, when they walk past a building that they built, they get a feeling of accomplishment, a feeling of pride based upon the fact that there’s a physical representation of the work that they did. I feel similarly when I walk past a building that we have acquired and improved, and Mrs. Jones’ comments on how happy she is relative to what she felt prior to our ownership. And that is from top to bottom, so that’s one. 

The second thing I’ve learned is that it’s complex, and that it is not the easiest thing to do, but if you are diligent, and you stick to what is core to what you believe to be your mission, as well as your ethics, then you can exist in a world where you are generating exceptional returns for your investors and at the same time improving their lives of your residents. 

What is the mission of Asland Capital?

In C.S. Lewis’ Chronicles of Narnia series, there is the primary character, whose name is Aslan. It is an allegorical character that is omniscient and is a guardian of the children, who are the main protagonists of the story, but he arrives at times in which they are at most in need, and he is the steward of all that is good, and that’s what we aspire to be. 

We are primarily multifamily focused, and I’d say we are primarily investors in existing assets. We are buyers and holders. We are improvers or value-adders. We believe by adding value to our assets, we are also adding value to the neighborhoods of which they exist. We are active participants, and believe that we are positive agents within our communities, where we have open and active dialogue with who we believe our clients to be, which are tenants and residents. In every instance of assets we own or invest in, that’s our motto. 

Brian Pascus can be reached at bpascus@commercialobserver.com