To further Leverage.com’s mission of democratizing knowledge about commercial real estate, we started an interview series with all kinds of CREF pros: everyone from multifamily and medical to cannabis and construction. This time we connected with Marc A. Hershberg, MSRE, Managing Partner & CEO at Topaz Capital Group LLC, a leading private debt and equity real estate investment firm that focuses on multifamily garden-style and mid-rise properties in high-growth markets throughout the Southeast with a heavy focus on public and / or private partnerships across the State of Florida.
What was it like transitioning from a corporate environment, such as UBS, to working at Brick Capital and then later on when founding TOPAZ?
Transitioning from a corporate environment and culture to a boutique one was extremely refreshing and liberating for an entrepreneurial spirits such as myself, at which time I felt I was being suppressed and ultimately, hindering both my professional and personal growth. Going to a more boutique firm also allowed me to gain a lot more exposure to more aspects of the real estate business, which played an integral role in further understanding how to put my own deals together.
Granted, there are many positive aspects, including tons of perks, when working for a large corporation, such as UBS, or any other large financial institution, but the pros did not outweigh the cons for me personally.
And most importantly, there are tremendous lessons to be had (i.e. learning to work within hierarchy, collaboration across all divisions, communication with higher ups and C-suite executives, etc.) in a corporate setting that you can leverage later on in life when building out your own organization.
Can you tell our readers a bit about your experience working for a leading NYC-based alternative debt fund and how that skill has transferred to your current work?
While I have experience originating and underwriting for a debt fund that focused on recycling the majority of its capital, most of my activities to date have been more so on the equity, acquisitions, development, and ownership side of the business. That being said, understanding the many ways to structure/size the various tranches of debt in deals is a tremendous value when working on projects with your existing or prospective lender (being on the other side of the table and knowing what to look for plus sharing in the nomenclature). And lastly, being able to talk the same language as the lenders has been a huge value add to TOPAZ.
Topaz specializes in multifamily primarily in Florida for years now, and it seems like that asset class/market is thriving today. Any plans or predictions for 2022?
Image Provided by TOPAZ | TOPAZ Retreats
That’s correct. We are very bullish on Florida’s growth long term, and thus we are continuing to buy any and all multifamily garden-style or mid-rise multifamily assets in Florida that pencil and fall within our wheelhouse of 80+ units and ‘80s or newer vintage product. Once again, we believe we are very much in the early innings of Florida’s growth and success story, and given that we are an “early subscriber” to the greater Florida markets has given us an advantage in not only sourcing deals, but providing our Sellers with a very high certainty of execution alongside our Florida acquisitions track record.
Image Provided by TOPAZ Capital | TOPAZ Oaks in Florida
And, lastly, our prediction for 2022 is that pricing will stay somewhat the same until the last quarter of the year, whereby there are lots of unknowns (i.e. inflation, supply chain issues, international and domestic political uncertainty, etc) that often times deters cheap and active debt and equity players and, in turn, pricing adjusts accordingly.
For our readers who are interested in 1031 exchanges, can you tell us how your Topaz TEN31 LLC platform works?
TOPAZ TEN31 is the new alternative to NNN’s & DST’s whereby we act as a one-stop-shop for advisory and investment platform that allows 1031 exchange investors to participate in our institutional-grade multifamily garden-style or mid rise properties via a TIC (tenant in common). Our TOPAZ TEN31 team consists of investment professionals, 1031 tax counsel, 1031 accountants, 1031 legal advisors, 1031 Qualified Intermediaries, and more to meet all your 1031 needs for equity checks ranging from $1-75M.
Why did Topaz get into proptech investing via Topaz Ventures LLC & Topaz Ventures I LP, and what return do you hope to receive?
Our PropTech arm, Topaz Ventures, was a natural progression for TOPAZ, considering it’s expertise in property and using varying technologies in our portfolio. And given our entrepreneurial nature and love for technology, we figured why don’t we also become an early stage investor and shareholder in the very technologies we and those in our industry are leveraging to enhance our businesses both digitally and economically. And in terms of returns, our new and exciting PropTech seed venture fund is aiming to achieve no less than a 4x EM and 30%+ IRR portfolio-wide.
You have an impressive list of partners. How did you build those relationships and what lesson did you learn from cultivating such relationships?
All of our relationships are predicated on being good partners first and doing good deals second, and furthermore, our candor and integrity is what our relationships in the industry truly value the most at the end of the day! Deals come and go, but relationships are life long and an extension of our overall reputation. And lastly, given our reputation and being a “young-company with high growth”, we were able to have doors opened by existing partners and servicers that would have been otherwise inaccessible.