Abbe Franchot Borok and Dara Friedman
Managing director and head of U.S. debt at BentallGreenOak; Managing director and portfolio manager at BentallGreenOak
After making $2 billion in originations in 2022, the leadership at BentallGreenOak’s Core Plus Fund believes even more profoundly in its philosophy of homing in on demographics and human capital when assessing potential markets in which to invest financial capital.
Dara Friedman’s research team and data science team analyze more than 300,000 variables across hundreds of ZIP codes in the top 25 U.S. markets and combine those metrics with what they’re seeing on the ground across their firm.
“We kind of circled and said, ‘OK, we’re going to invest in demographics. So where is this growth happening and how do we get ahead of it?’ ” said Friedman.
“We do not benchmark our portfolio construction to markets and product types. We benchmark by investment profile,” she added. “Our focus is defense, resilience and optionality. For us, that means income, growth and upside, respectively.”
BGO saw a ton of upside in both the Sun Belt and West Coast in 2022.
The firm acquired a large multifamily investment in the Miami area for $160 million, where BGO initially underwrote rent trade-outs in the 10 to 12 percent range and were able to achieve trade-outs of 20 to 25 percent after closing. Another investment the team closed following the mid-year interest rate hikes was a $40 million life sciences research and development facility in Southern California.
“[We like] assets that are transitive and don’t have high capital costs,” said Friedman. “That means newer multifamily, industrial that is more R&D, life sciences. Roughly 80 percent of our portfolio is representative of those themes.”
On the debt side, Abbe Franchot Borok was able to augment BGO’s traditional bridge business by expanding into two specific market segments as a debt provider: construction loans and recapitalizations, or refinances, where groups needed more structured solutions.
One of the biggest deals Borok quarterbacked in 2022, using the firm’s $4.6 billion in U.S. debt under management, was originating the takeout of a $137 construction loan on a Class A LEED-certified multifamily apartment complex in Downtown Washington, D.C.
“Over the last few years, we’ve successfully begun to expand the BGO debt platform, and the power of the platform has allowed us to grow, in scale, our U.S. debt business in a really efficient way,” Borok said. “So we’re really excited about the opportunity.”
All told, the firm has $80 billion in assets under management, all in commercial real estate, across both debt and equity markets.
“We’re providers of flexible capital,” said Borok. —B.P.