Atlas is a real estate investment firm focused on value-add multifamily, student housing, retail, and office assets throughout the United States. The company has local partnerships and satellite offices in each market they target. Raising capital on a deal-by-deal basis from a large pool of high net worth investors, Atlas has grown from its founding in 2009 to manage over $1B in AUM today. Atlas has been using Juniper Square since February 2017.
We talked to Joe Stampone, Vice President of Investments at Atlas, about raising capital, investor expectations, and technology.
Juniper Square: Tell us about Atlas and why you’ve chosen to raise capital deal-by-deal instead of raising a fund.
Atlas was founded in 2009 by Arvind Chary and Alex Foster. We focus on undervalued multifamily, student housing, retail and office investments, primarily in markets where we have local partnerships, like Washington, D.C. metro, Florida, New York metro, Boston metro, and Texas.
We see a number of advantages to raising capital on a deal-by-deal basis:
- We’re never forced to put money to work. We can be selective and only acquire deals that we think offer attractive risk-adjusted returns.
- We maintain full control, which provides flexibility in hold periods. We can choose to exit an investment at a time that maximizes investment returns as opposed to the end of the fund life.
- We target mid-sized deals and bring an institutional approach to the sub-institutional space. We generate outsized returns by targeting deals under $40MM.
Our structure positions us to acquire unique deals at an attractive basis and hold them long-term, delivering superior returns to our investors. Consistent returns and high integrity business practices have allowed us to build trust with our investors, and therefore raise capital very quickly when we uncover an interesting opportunity.
Juniper Square: What strategies have you used to grow your investor base?
Our investor base started as a handful of friends and family, and has grown to a network of 500+ individuals, organically through word of mouth. The growth was driven by strong performance of early deals, consistent deal flow, and great reporting.
By far, our most valuable asset is the trust we’ve built among our investor base. Trust is earned over a long period of time. It means we always do what we say we’re going to do, deliver consistent performance, provide high quality reporting, and generally operate in an institutional manner. We’ve done this for nine years, and established the trust needed to endure any challenge that comes our way.
To retain our investors, we must continuously innovate, think differently, and improve our operations. The measure of success is our ability to perform well across all market cycles. At Atlas, we’re trying to build something sustainable that lasts well beyond us.
Juniper Square: What technologies do you leverage to power your business?
We use several technology tools to improve our acquisition, asset management, and investor relations processes.
On the acquisition side, we leverage the power of structured data to make better decisions. For our multifamily platform, sale and rent comps are important, so we use data from Costar. Submarket vacancy and rent growth are also critical, so REIS and Axiometrics are useful. When layering in economic data, we use sources such as ESRI. We also take advantage of in-house data we have from our historical investments.
For underwriting, we use Rediq to quickly assess deals and determine if they warrant further analysis. The tool allows us to quickly analyze the rent roll and historic revenue and expenses of an asset, easily comparing it to similar assets within our portfolio.
We’re assessing tools like DealPath for the asset management side of our business. We’re looking for technology for our asset management checklist, to help collaborate with onsite management and local partners, manage documents, and structure portfolio data.
For investor relations, we’ve been using Juniper Square since early 2017, and it’s been an absolute game-changer for us, improving all aspects of communication with our large base of investors (read an extensive review of Juniper Square in Joe’s personal real estate blog).
Juniper Square: What do you think is most important to high net worth (HNW) investors?
There are a number of things our investors have come to expect from us.
Consistent risk-adjusted returns: Of course, all investors want great returns, but returns must be evaluated on a risk-adjusted basis. You may consider a 13% IRR and 2.0x multiple on invested capital over three years a great return, but what if I told you these were the returns achieved on a speculative development deal in a tertiary market? Returns must also be attractive relative to other investment options.
Detailed investment memos: First impressions count. Although the typical HNW investor doesn’t require overly detailed investment memos, we think it’s important and a potential differentiator. Our investment memos are 20-30 slides long and describe the opportunity, business plan, submarket, and underwriting in detail.
Great quarterly reporting: Quarterly reports are an opportunity to convey the value that is being created, flag any concerns, and highlight any hedges to downside risk. These reports should provide a concise narrative with updates on property performance, the physical asset, and the submarket. Additionally, we provide each investor a portfolio update, which is auto-generated by Juniper Square. It takes us minutes, and provides a market-leading experience to our investors.
Social Mission: Many HNW investors want to work with firms that have a social mission. At Atlas, we work with several charities, including the Covenant House. Over the past five years, the Atlas team, along with the NYC real estate community, has raised over $2.4MM for the children of the Covenant House.
Going Above and Beyond: Having a large network of HNW investors creates an interesting opportunity. Since we build personal relationships with each investor, we can find creative ways to add value through facilitating introductions.
Every single touchpoint with investors is an opportunity to build trust, demonstrate your institutional execution, and distinguish your firm from the competition. It’s a privilege that can’t be wasted.
Joe Stampone is Vice President of Investments at Atlas Real Estate Partners. In his role, Joe is responsible for sourcing and analyzing value-added real estate investments and developing the company’s strategic vision. Joe blogs frequently on his personal site, A Student of the Real Estate Game, about his thoughts on real estate investing, technology (including Juniper Square), and entrepreneurship.