CRE Principals…You’re Leaving Money on the Table. A Lot of It.
Smart commercial real estate principals love finding the deal no one else knows about. Yet there’s an obvious deal out there that’s routinely being ignored - something that residential real estate brokers have been taking advantage of for years while CRE entities have been missing out. It’s a stream of impressive profits being left untouched, staring commercial principals in the collective face.
Article By Matt Einheber, Principal at TitleEQ & Creator at TitleBox
Smart commercial real estate principals love finding the deal no one else knows about.
Yet there’s an obvious deal out there that’s routinely being ignored - something that residential real estate brokers have been taking advantage of for years while CRE entities have been missing out. It’s a stream of impressive profits being left untouched, staring commercial principals in the collective face. By ignoring it, CRE entities have been leaving quite a bit of money on the table.
Title and settlement services are not on the radar for most investors, sponsors, principals and other CRE decision makers. But for those willing to deploy the right joint venture, the opportunity for meaningful profits and a more streamlined operation can be huge.
You might be surprised at how big. Even smaller organizations can realize a passive seven-figure profit while simultaneously lightening their operational load. That said, it’s not an automatic win. There’s a lot to consider.
Vetting an operational partner for a joint venture
Title is a deceptively complicated business to operate. It’s anything but simple and is critical in managing debts and liabilities against real estate, protecting value and managing a high risk and logistically complex transaction.
Most title companies focus on residential transactions and don’t have the depth of knowledge to properly handle the more complex issues that are common to CRE. Very few have done much to make meaningful advancements in process, workflow and technology. In fact, it’s a bit of a surprise to realize how manual many title operations are… even some of the largest and best recognized in the space.
These reasons alone should be enough to convince professional real estate buyers that the title or closing vendor should be vetted and chosen carefully. There’s a lot of value in deliberately choosing a title company to work with regularly.
Introducing the prospect of a joint venture with a title operator usually brings up questions of compliance, profitability, operational competence, risk and more. Title is specialized enough that even most adjacent real estate pros don’t really know how to vet title firms or which common mistakes to avoid.
However, this choice brings with it risk with a disproportionately high reward.
The title industry is still largely a dusty, antiquated space with a great deal of complexity in its operations (in spite of its continued reliance on manual processes). It takes an experienced operator committed to leveraging things like technology or third party service providers (where warranted) to maximize efficiencies and build optimal profit margins. Where that takes place, an affiliated closing operation not only provides the principal with greater control over the entirety of the transaction, but will super-sized profits as well.
It's not just a simple matter of hiring the local title agency to build an affiliated arrangement. In many cases, moving without knowing how to properly vet your operating partner can be disastrous, and add time, tension and unnecessary expense (or delay) to your business.
Here are the most important considerations to properly vet a potential title partner:
Experience and track record
First, any operating partner you meet should, obviously, understand and have experience with title and closing. That sounds simple enough. They should also have significant supportive infrastructure.
A big point is that the potential partner should be familiar with the markets in which your closings will occur. If you’re planning on closing deals not only in Miami, but in Port St. Lucie or Georgia or New York for that matter, be sure that your potential JV partner is an expert in the requirements and customs of those markets. Everything, including laws, rules, customs, workflow and dollars, can vary widely from not only state to state; but county to county and even city to city.
Problem Solving
Potential JV partners should be the very best problem solvers. First principal thinkers. Investigators. Negotiators.
It’s the job of your title representation to figure out how to ‘get to yes’ when it comes to negotiating with underwriters, lenders, buyers and sellers.
If you’re an attorney or have ever been on the legal side of complex transactions, you’ll understand exactly what that means. The best title experts anticipate problems before they happen, create multiple possible solutions and know how to negotiate risk to protect you while delivering results.
These people are invaluable to your attorneys and your organization at large.
Technology and Solutions
There’s software to address almost every minor problem, but some of the biggest challenges come with choosing the right technology and best means of using it.
It’s arguable that this is the single most common and biggest challenge for any business today in any industry. It requires determining what will help and what is a waste of money, then getting those otherwise disparate technologies to work fluidly together, first serving the client experience and then improving internal efficiency.
This speaks to operational lift and profitability.
Probably every business out there is wasting money on a platform or an app that’s just not helpful enough. I frequently encounter tech solutions to simple problems that amount to overkill. The clunkiness of using multiple providers for a single process can be truly frustrating.
We all know that Proptech has been generally slow to catch up with other industries, and title is an exaggerated version of that. It’s not without reason, but times are changing.
The best title JV partners serve as curators of the most effective technology. Because the closing process can vary so widely, there is no “universal” settlement platform or tech stack. The best closing firms build stacks that easily accommodate their clients’ needs as well as effectively addressing compliance requirements as well as market requirements.
At the same time, there are instances in which a title company is better served by leveraging efficient third party service providers to maximize efficiency and minimize expense. These operators also understand when it makes the most sense to make use of a national or centralized resource, and when using local expertise could actually create a smoother process.
There are certainly problems technology can solve. There are many that are better served by humans, aided by the intel, focus and access that technology can deliver. Understanding how to find this balance, and keep the operation fluid and performing without getting distracted by shiny objects is the key. Plus, the practice of continuously reviewing potential new solutions is something we should all value in our own businesses as well as with any new partner.
Compliance
As it relates to CRE, title insurance regulations fall under the jurisdiction of each state’s insurance department.
Depending on the state, compliance can be reasonable and manageable, or can involve monthly/quarterly/annual audits, reporting, brick and mortar locations, data licensing by county, or other complicated requirements.
Obviously, while making a play at profits, it simply isn’t worth risking your core business interests over legal matters. Choosing a JV title partner with solid compliance expertise and which has the resources to manage them is not optional.
These are all factors to consider for CRE principals looking to capture additional revenue by controlling the closing process with an effective title JV. Those who aren’t sure where to start can begin by locating a seasoned title expert or third party consultant. It’s important that any “expert” understand how the principal works and what kinds of transactions and markets are most familiar to that principal. True “experts” also offer several options to consider, rather than leaning on one brand or firm for almost any situation.
Nobody intentionally leaves money on the table. Yet, for years, CRE principals have been happy to hand off an entire revenue stream to someone else’s “guy.” Perhaps that’s fear of the unknown. Perhaps too many principals simply don’t realize there’s true revenue to be had. The key is to partner with a firm that can build an operationally sound title organization and an efficient workflow. In doing so, CRE principals can potentially take what looks to be a pretty good year in the CRE market and make it great.
About Matt Einheber, Title EQ:
Matt is a principal of and the driving force behind TitleEQ, a national settlement services agency serving clients nationwide, and TitleBox, the developer of technology designed to streamline risk management in the title industry.
His experience with real estate transactions began in the early 2000’s in real estate finance, which led to settlement services and ultimately his move to start his first title company in 2005.
Since then, Matt has played an integral role in forging industry-shaping technology and business processes for the settlement and closing operations of title companies, underwriters, real estate brokers and agents across the country. Matt’s current focus is TitleEQ and its family of companies; the result of years of technology development and learned execution to approach real estate settlements in a way that’s very unique.
Inside the PROFILE South Florida Capital Markets Summit at E11EVEN Residences Miami
On Wednesday February 7, 2024 PROFILEmiami hosted its inaugural, sold-out South Florida Capital Markets Summit at the E11EVEN Residences Beyond sales gallery in Downtown Miami’s fast growing District 11 and Miami Worldcenter. The exclusive panel featured industry leading developers Dan Kodsi of Royal Palm Companies, Juan Pedro San Martin of Merrimac Ventures and financiers Raul Llanes of City National Bank, Michael May of Silverstein Capital and Justin Oates of Cain International; moderated by Matt Einheber of TitleEQ.
On Wednesday February 7, 2024 PROFILEmiami hosted its inaugural, sold-out South Florida Capital Markets Summit at the E11EVEN Residences Beyond sales gallery in Downtown Miami’s fast growing District 11 and Miami Worldcenter. The luxurious event featured PROFILEmiami’s highly regarded Bespoke Networking powered by E11EVEN Vodka and an engaging panel exploring the current state and future of how real estate in Miami is valued, financed, and transacted with South Florida’s top real estate and finance executives. The exclusive panel featured industry leading developers Dan Kodsi of Royal Palm Companies, Juan Pedro San Martin of Merrimac Ventures and financiers Raul Llanes of City National Bank, Michael May of Silverstein Capital and Justin Oates of Cain International; moderated by Matt Einheber of TitleEQ.
Panelists had a comprehensive discussion about the current capital stack in commercial real estate deals and explored strategies that sponsors can employ to optimize their capital structure. The discussion also delved into the market's underwriting standards and loan-to-value ratios, uncovering their influence on loan approvals; as well as a spectrum of financing options, from debt and equity to mezzanine financing and EB-5, and grasp typical terms offered. The industry leading panelist also shared stories about their past experiences and how they navigated their careers to get to where they are today.
Part of PROFILEmiami’s highly-regarded PROFILEconnect bespoke networking event series, the event brings together Miami’s real estate industry and business professionals to network and connect outside of a traditional business setting. Guests enjoyed E11EVEN Vodka and an open bar powered by Title EQ as well as Zeroe Plant Based Caviar.
Meet the Panelists Speaking at The PROFILE South Florida Capital Markets Summit at E11EVEN Residences Miami
On Wednesday February 7, 2024, PROFILEmiami will host its inaugural Capital Markets Summit, bringing together some of the biggest movers and shakers in real estate development in Miami to explore the state of financing and capital markets in the real estate industry. The panel is set to feature industry leaders developer Dan Kodsi of Royal Palm Companies, Dev Motwani of Merrimac Ventures, Raul Llanes of City National Bank, Michael May of Silverstein Capital and Justin Oates of Cain International; moderated by Matt Einheber of TitleEQ.
On Wednesday February 7, 2024, PROFILEmiami will host its inaugural Capital Markets Summit, bringing together some of the biggest movers and shakers in real estate development in Miami to explore the state of financing and capital markets in the real estate industry. Discover the intricacies of commercial real estate investment and financial markets where industry leaders will dissect the impact of changing interest rates, inflation, and global economic conditions on investment decisions. The exclusive panel is set to features industry leaders including developer Dan Kodsi of Royal Palm Companies, Dev Motwani of Merrimac Ventures, Raul Llanes of City National Bank, Michael May of Silverstein Capital and Justin Oates of Cain International; moderated by Matt Einheber of TitleEQ.
Panelists will have a comprehensive discussion about the current capital stack in commercial real estate deals and explore strategies that sponsors can employ to optimize their capital structure. The discussion will also delve into the market's underwriting standards and loan-to-value ratios, uncovering their influence on loan approvals; as well as a spectrum of financing options, from debt and equity to mezzanine financing and EB-5, and grasp typical terms offered. The discussion serves to educate attendees to anticipate future challenges and opportunities in the commercial real estate financing landscape while acquiring best practices for managing and mitigating risks, particularly in times of economic uncertainty.
Meet our panelists and be ready for the interactive Q&A session to follow:
Dev Motwani, President & CEO, Merrimac Ventures
Dev Motwani serves as President and CEO of Merrimac Ventures, a Fort Lauderdale based real estate firm that focuses on value-add investment and development opportunities. Property types owned and operated include hotels, condos, retail, office and rental apartments primarily in South Florida but also throughout the United States.
Dev is also Founder and Managing Partner of Ramesh Properties, a distressed real estate investment fund focused on opportunistic investments in residential and commercial development sites throughout South Florida. He currently oversees nearly $750 million in development projects. Current projects include the Four Seasons Hotel and Private Residences, The Gale Boutique Hotel and Residences, as well as Las Olas Riverfront, all in the Fort Lauderdale area.
Dev is Founder and Managing Partner of Chieftain Residential, a yield-oriented distressed residential fund purchasing single-family homes, and residential land, primarily in the Southeast US and Texas. The fund aims to balance current income opportunities through the rental markets for its single-family home inventory, while also targeting capital appreciation in single family homes and land as the US Residential Market continues to rebound.
Prior to his current role, Dev worked at Credit Suisse in New York City, where he first structured OTC Equity Derivative trades for the firm’s largest corporate clients and then for the firm’s largest hedge fund clients. Before that, he worked in the White House and on the 2000 Gore/Lieberman Presidential Campaign.
Dev plays an active role in the South Florida Community, through his involvement with numerous charities and business organizations, currently serving on the board of the Broward Center for the Performing Arts Foundation, Fort Lauderdale’s Economic Development Advisory Board, and the Downtown Council. He was recently appointed to the Orange Bowl Host Committee.
He previously served on the boards of the Riverwalk Trust, Greater Fort Lauderdale Chamber of Commerce, and Broward County’s Small Business Advisory Board. Dev has served as Co-Chair for the Bonnet House’s Annual Impressions Fundraiser, the Ghost Light Society’s Annual Soiree, and the Jeb Bush Classic Beach Bash benefitting the Cystic Fibrosis Foundation. This year the Motwani family co-founded the Laughing Out Loud fundraiser benefitting the Scleroderma Foundation, which raised over $170,000 for the charity.
Dev graduated from Duke University with a Bachelors of Science degree in Economics and Public Policy and from Columbia University’s Masters of Science in Real Estate Development Program. He has also studied at the London School of Economics.
Dan Kodsi, CEO, Royal Palm Companies
Since 1991, Mr. Daniel Kodsi has been CEO of Royal Palm Companies (RPC). Under Kodsi’s leadership, RPC has developed over $3B in completed projects to date with over $2B in the pipeline. During the last three decades, Kodsi has delivered over 6,000 units consisting of over 14 million square feet of mixed-use and master-planned communities, hotels, multi-family, and high-rise developments.
Kodsi is known for identifying underserved markets alongside of his ability to execute large-scale, mixed-use developments, and master-planned communities. In 2011, Kodsi founded Participant Capital as the capital arm of Royal Palm Companies and a vehicle to empower individual investors to participate in ground-up construction projects. Mr. Kodsi is the CEO/Managing Principal of Participant Capital and Chairman of the Investment Committee.
Throughout his career, Kodsi has been credited for changing skylines with his award-winning projects. Kodsi has created several branded residences including the Paramount brand that includes three distinct properties including the recently completed and internationally renowned, Paramount Miami Worldcenter, which is the second largest master-planned urban project in the United States.
RPC’s latest branded residence is the Legacy Hotel & Residences in the Miami Worldcenter. This mixed-use tower will overlook the heart of downtown. It offers both buyers and investors a unique blend of business models across hospitality, real estate, preventative healthcare, and wellness that work financially independently, but also creates an asset ecosystem that appeals to the new ‘disease conscious traveler’.
Kodsi has appeared as a guest on national television newscasts, major cable business networks such as CBS World News, NBC Universal, CNN, CNBC, FOX News, MSNBC, Bloomberg News and is a regular guest on FOX Business news. He has also been a frequent guest speaker and panel member for The Urban Land Institute, Real Deal, BizNow, the National Multifamily Housing Council, and the EB-5 Council.
Michael May, President, Silverstein Capital Partners
Michael May is a founder and the President of Silverstein Capital Partners (“SCP”) and oversees all lending operations. SCP has committed over $1.6 billion on office, industrial, residential, retail, hospitality and mixed-use projects in urban markets. SCP provides senior loans, bridge loans, subordinate loans, and rescue capital to borrowers on shovel-ready ground-up construction, heavy value-add repositioning, lease-up projects, land, and inventory loans on completed condominium projects. SCP’s funds are capitalized by two global institutional investors and Silverstein Properties, Inc. SCP also has an active separate account business.
Previously, Mr. May was a founder and Chief Operating Officer of Cantor Commercial Real Estate (“CCRE”), where he led the origination of than $50+ billion of commercial real estate loans. Mr. May was responsible for raising institutional and private capital, sourcing corporate financing, high-yield bond raises, loan origination, loan distribution, and securitization for the venture. From its creation in 2010, CCRE closed 2,000+ financings on all property types in 50 US states, 3 US territories, Mexico, and the Caribbean. Mr. May oversaw conduit, transitional, large-loan, small-balance, single borrower, Agency, and net-lease lending as well as a $58 billion servicing book.
Prior to CCRE, Mr. May was a Managing Director at Credit Suisse (“CS”) where he was a senior member of the Real Estate Finance Group. Mr. May joined CS in 1997 and oversaw West Coast and Latin American operations including the origination and distribution of CMBS, whole loans, and subordinate debt. Mr. May originated $20+ billion in financings and innovated numerous CMBS products including securitization structures for condominiums, construction, ski mountains, and casinos.
Before CS, Mr. May worked at General Electric Capital Corporation where he focused on the acquisition of subordinated CMBS and the structured distribution of whole loans, asset backed securities, and real estate equity. Mr. May also spent seven years at Arthur Andersen LLP in the Real Estate Consulting Group, working in the US, Western Europe, Russia, and Latin America providing advice on project feasibility, loan valuations, securitization structuring, and workout strategies.
Mr. May holds a BS in Finance and a BA in Psychology from the University of Maryland at College Park.
Raul Llanes, Managing Director, Head of Specialty Capital Markets, City National Bank
Raul has over 18+ years in Real Estate Investment Banking, Syndicated & Corporate Capital Markets, Structured Credit, Private Equity, and Commercial Real Estate lending. Currently, he is working for City National Bank as Head of Capital Markets leading the efforts of Loan Syndications, Placement, and Specialty Lending. City National Bank originated $3.47 billion of commercial mortgages in 2022, making it the third most active commercial lender in the state of Florida.
Raul graduated from Florida International University with a BS in International Business and Business Administration and holds an MBA in International Business from University of Miami.
Justin Oates, SVP, Cain International
Justin oversees Cain’s Miami portfolio, which includes 830 Brickell, Missoni Baia and Una Residences, among other residential, office and hospitality projects and development sites. Throughout his career, Justin has worked on over $10 billion of real estate transactions. Justin joined Cain from Dreamscape Companies in New York City. Prior to that, Justin worked at Savanna and started his career at Eastdil Secured.
Cain International is a privately held investment firm focused on real estate and business opportunities that shape the fabric of global gateway cities. The firm currently manages over $16 billion in assets through its real estate equity, real estate debt and private equity platforms. Cain is a partnership between its CEO, Jonathan Goldstein, and Eldridge.
Justin holds a Master of Commerce from the University of Virginia and a Bachelor of Science in economics from Boston College. Justin is actively involved in the Advisory Board for the Master of Real Estate Development + Urbanism program at University of Miami’s School of Architecture and is a member of PropTech Angels, a group of real estate professionals that invests in early-stage real estate tech companies.
Matthew Einheber, Principal, Title EQ
Matt is a principal of and the driving force behind TitleEQ, a national settlement services agency serving clients nationwide, and TitleBox, the developer of technology designed to streamline risk management in the title industry.
His experience with real estate transactions began in the early 2000’s in real estate finance, which led to settlement services and ultimately his move to start his first title company in 2005.
Since then, Matt has played an integral role in forging industry-shaping technology and business processes for the settlement and closing operations of title companies, underwriters, real estate brokers and agents across the country. Matt’s current focus is TitleEQ and its family of companies; the result of years of technology development and learned execution to approach real estate settlements in a way that’s very unique.
The PROFILE Capital Markets Summit is the next installment of PROFILEmiami’s highly-regarded PROFILEconnect bespoke networking event series, which brings together Miami’s real estate industry and business professionals to network and connect outside of a traditional business setting. PROFILEconnect is attended by Miami’s top investors, developers, business professionals, brokers, financiers, architects, designers and other service providers.
Guests will have the opportunity to network and share their experiences in South Florida through thoughtful discourse, while forging new relationships with industry leaders. The night will feature an hour of networking with sounds by local DJs DAKAP, followed by the panel discussion and Q&A, and will finish off with more networking, supplemented by an open bar by Brugal 1888 and E11EVEN Vodka throughout the night and bites by Zeroe Plant Based Caviar.
Date: Wednesday, February 7, 2024
Where: E11EVEN Residences Beyond Sales Gallery, 1018 N Miami Avenue, Miami, FL 33136
Time: 6 PM - 9 PM
Music: DAKAP
Food & Drinks: Zeroe Plant Based Caviar, E11EVEN Vodka, Brugal 1888 Rum
Panelists:
Dev Motwani, Merrimac Ventures
Dan Kodsi, Royal Palm Companies
Michael May, Silverstein Capital
Raul Llanes, City National Bank
Justin Oates, Cain International
Moderator: Matthew Einheber, TitleEQ
Who Should Attend: Developers, Investors, Brokers, Lenders, Private Equity, Family Offices, Architects, Lawyers, Designers, Wealth Managers, Financial Planners, CPAs and other Business Professionals.
Schedule:
6 PM - 7 PM: Cocktails & Networking w/ sound by DAKAP
7 PM - 8 PM: Capital Markets Panel
8 PM - 9 PM: Cocktails & Networking w/ sounds by DAKAP
Thank You To Our Sponsors:
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