John R. Benda, a Senior Equity Research Analyst at National Securities Corporation, says REIT management teams with “deep experience and the huge Rolodexes” are likely to outperform, He says Lennar Corporation (LEN), which has a distressed investing unit and a multifamily unit, is one such company.
“The CEO who runs that, Rialto, is Jeff Krasnoff. It’s the same thing — he has a lot of connections and contacts within the industry, and that’s allowing his unit to secure deals others aren’t privy to,” Benda says. “Lennar is run by Stuart Miller, who’s the CEO, and Bruce Gross, who’s the CFO; one of the best builders I think in the space.”
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Benda believes Lennar’s Rialto unit is outperforming because of management’s connections to buy land. He expects the same kind of outperformance for Lennar’s multifamily REIT business.
“You don’t want to go and bid against 10 other people for an apartment building, because then you’re going to pay the maximum price,” he says. “You want to be able to find a building that you know is good and then purchase on a one-off basis a transaction where there aren’t many people involved or there are no bidders at all.”
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