July 7, 2022

What is a Co-GP Fund? With Jalal John Azar


 Jalal John Azar is a valued executive who, leveraging his years of experience and education, delivers lasting and impactful solutions. A very result-oriented leader, he motivates and inspires the people around him to deliver best-in-class services and build strategic partnerships. Today Jalal teaches us what a Co-GP fund is!

Transcript


 Josh
 Good day, fellow dealmakers. Welcome to the deal scout on today's show. We're going to have a conversation about code GP. What the heck is that? July? Welcome to the show, man. 


 Jalal
 Thanks, man. I appreciate it. Thanks for having me. 


 Josh
 Yeah. All right. So this is cool. We're going to be talking about multifamily, institutional capital, institutional investing code GP and GP economics, all these cool keywords that you were sharing with me, but let's start with who are you? 


 Jalal
 Wow. That's a, that's a loaded question. No, I'm just kidding. It's not a loaded question. It's a, it's an easy question. I'm a, I'm a guy who loves being in, loves what he does on a day to day basis. Man. I'm, I'd like to think that I'm accessible and I find joy in the day-to-day life and in the simple things, I I'm, devoted friend devoted, family guy, devoted father that's who I think of myself first and foremost, what people think of who I am is I guess, someone who is, have been in the industry for many years, entrenched in multifamily, investing in commercial real estate investing have had a pretty big background in finance and investments in general. And I am a thrill seeker. I'm a deal junkie, but the thrill seeking is not interchangeable with deals because I, I keep my thrill seeking to my mountain biking, not to my deals I need to, I need to make sure I cross my T's and.my I's. 


 Jalal
 I'm a actually a lot more conservative in my deals than I am in my mountain biking. So yeah, Yeah, yeah. All of these are, are who I am as a person. 


 Josh
 Yeah. You get your excitement fix from the mountain bike and then you come back into the deal with your conservative focus and cause you're working with you work with some pretty big groups and you've done quite a big number in terms of deals you've done. Kind of give us an overview of, some of the milestones you've achieved in your business career. 


 Jalal
 We have, we have, and I thank you. Yeah. I mean, we I've worked. I've had the fortune of working with, with family. I've my previous in my previous company, Mac venture partners still is around. My brother is the CEO and founder of that company. I was, were, we are partnered with that, and that company, that was very active in the multifamily space between 20, 10, 20 11. And about 2020. We transacted north of 6,000 doors in total during that time. That's not what we have right now in our portfolio, but we had a lot of fun. We, it was, it was a hell of a time in the industry and it was prime time. It was, it, went through a couple of different cycles, excuse me, I don't know what happened. And, and in 2020 we realized that the portfolio is if we would better served as net sellers on that portfolio, then we, if were to continue, we still buy every now and then we still look at assets to buy. 


 Jalal
 My brothers to look, it looks at asset to buy on, in a separate company, we just decided to kind of bifurcate the business and launch a couple of different pursuits at that time, B 15 was one of those big 15 as we wanted to do, wanted to still do some deals, but not be the main GP on the ground. We wanted to have other sponsors who are running the deals for us. We would come in and code GP with them. The majority of what we do with big 15 has raised institutional capital equity capital for other sponsors deals across the nation. Not just a multi-family because I'm such a deal junkies. I want it to open it up to other asset types. We will look, we will source equity capital for multifamily, for industrial commercial office space, hotel conversions, student housing, pretty much anything that is fundable from an equity source that we have, we can pursue as long as the money's there, as long as the return profile is there, as long as the, the sponsor is, has their head on straight and they, they have a good business plan thought out. 


 Josh
 Yeah. Why peak 15? What's what's the meaning behind the name? 


 Jalal
 Christine is the toughest graphical name to Mount Everest before it was called Mount Everest. It was Mount Everest got named in 1865, but before 1865, it was simply known as peak 15 from surveyors or what they used to be called computers at the time, computers were not machines. They were actual people back then. Computers discovered Mount Everest, they call it peak 15 because they didn't have any name to it. 


 Josh
 Yeah. So how did you choose that name? Why, why the symbolism, why was that important to you? 


 Jalal
 I'm a huge fan of mountaineering and adventure outside in general and that, that gut and grit of, of adventuring and mountaineering and reaching summits and reaching goals. That just seems very fitting that's, it's kind of played a big role in my life, and I have not climbed it for those who, who may have made wonder, I have not been to Mount Everest it's on the bucket list of going to at least at a base camp, but it's, it just embodies it everything. If you have a chance to read anything about mountaineering and mountaineers, and those guys who have done both done the climb, it just, it embodies a lot of, my value of, of fortitude and grit and moving forward and continue with the climb no matter what the conditions are. So that's, that just resonates with me. 


 Josh
 Super cool. What kind of bike set up do you typically ride with you? You said you're an avid mountain biker. What's your, what's your brand of choice? 


 Jalal
 I, I have an SUV bike that I'm getting ready to upgrade. Now. It's a, it's actually an REI. Co-op like, that's a, that's what suspension and it's a, it's a beast. It's more, it's again, it rides more like an SUV than it does. I, my girlfriend has a mountain bike that is Santa Cruz. She, her Santa Cruz is actually, I get jealous every now and then, cause she gets so fast on that. Even on trails that are, that are pretty rugged when I'm still, I, however, we'll go over a lot more rock gardens than she can on her Santa Cruz. Because my bike was over rock guard is like, they're nothing. 


 Josh
 Yeah. We're here in Ocala, central Florida, just south of us. There's a place called Santos by trails. If you ever make your way out, come visit. I'll I'll ride those trails with you, man. It's it's gorgeous. It used to be a home old rhyme or lime rock query. So they have some really nice drops. Nice woods. Beautiful. Next time you, if you love mountain biking, you should come check it out with me. 


 Jalal
 I love it. I love it. You're out. You're on man. I'd love to, Hey, I can never turn the aisle. I'll take it that invitation today. 


 Josh
 Yeah. I bring them. I have three kids, nine, five, and two. My five-year-old and my nine-year-old Dell go on there. There's a pump track too. 


 Jalal
 Oh yeah. 


 Josh
 So he'll go. He has this little bike that has no pedals on it, but you just use your feet and he's pumping and it's fun, man. Well, we'll have a blast. Come visit us. Oh, 


 Jalal
 That's awesome. He has like a little BMX bike. 


 Josh
 It's a, it's a trainer bike. It's like before they have the ability to like pedal and S get their bounce on their own. It's a balanced bike. It teaches them the fundamentals of the balance and such, but he goes on the pump and he'll go up and down the little Hills. He's crushing it, man. It's cute kids. Yeah. It's funny. Cause he has this big head and then he has this big helmet and it looks like a little lollipop going over these Hills. 


 Jalal
 Perfect. So cute. Perfect. Perfect. 


 Josh
 All right. Back to deals, as you're doing this, you guys have done a tremendous amount of deals, raising capital and such. Why when you guys are focused on stand-up peak and running this, why did you choose to go after institutional? Right? Because some people are more retail investors, some are different types of investors. Why did you choose institutional? What kind of impact have you had in that field? 


 Jalal
 We have retail investors. It's just, our legal charters allows us to only work with institutional investors and only bring one check to the table to the most extent. Otherwise it would have to become a broker dealer and raise money via a broker dealer route or us to become a broker dealer. I, that I did not want to do that. I did not want to go that route and become a broker dealer. We really kind of limited our focus and our scope to institutional investors to be able to do that effectively. To be honest with you, I'll bring my retail investors to deals that I'm involved in myself as a co GP. Once I, I get into a deal as a, as part of the GP group than I am more than happy to bring my individual investors do it. I just can't do that when I source equity for other people, when I source equity for other people, it's a lot more effective for us to bring one check to the table and it's effective for them as well for the sponsor, because it allows them the ability to just say, there's one partner in back at the table for them, whether it's an LP partner or limited partner or a, or a JV partner that would be, that would come in on the GP side of the equation. 


 Jalal
 It's just a lot easier for them to be able to predict, what they're going to do. How are they going to do it with one check to the table and one company to be able to do this with. 


 Josh
 Copy, how did you crack into that field? Right. That's that, that's a very complex, very sophisticated group of investors. How did you, how did you get involved in that? How did you get your start? 


 Jalal
 Yeah, so, I mean, so my background is in that field, I got started in the industry by being on the equity desk at Morgan Stanley back in the day. I grew up my teeth in the investment world with big shops, like Morgan Stanley and Royal bank of Canada capital markets group. I, I did my rounds and on that side of the equation and when I was, when my former partners and I had another company in Boston that I launched back in oh 4 0 5 called Boston venture partners. When my partners and I were working at Morgan Stanley, we had a couple of complicated deals that involve bonds, that we had to raise bonds for certain, for really huge development, like a billion dollar plus development in Miami. And, and at the end of that experience, after a couple of years where we decided that we would like to open our own shop and do structured finance for these large scale mixed use development, essentially acting as bankers for these complex large mixed-use deals on the Eastern seaboard for the most part, because a lot of our deals were in cities like New York, Boston, Philadelphia, Miami. 


 Jalal
 We did that for effectively for four or five years between oh 4 0 5 and 2009. We got handed the biggest lesson of our life. We, we, we pretty much lost our entire business overnight and we had to close shop and get day jobs. 


 Josh
 Yup. Yeah. See, that happened to me starting in oh six, cause I was just speculating on spec homes and Mike and I, we built $8 million worth of spec homes in 2006. 


 Jalal
 And 2006. It's. 


 Josh
 A lot, it's a lot because it started hitting us in oh 6 0 7. I had to go get a real job. I got the job in the government, doing as a firefighter medic. But man, that really hurt. Let me ask you this question. You've seen some ups and downs of industries and cause you've been in the game for . What do you think is the future of real estate now? Cause you're looking at, you say you do, commercial stuff, institutional multifamily, student housing, where do you think the market's at now with all this stuff going on in the world. 


 Jalal
 In a, in a period of very much needed change that has been coming for a while. I mean, we've been people in our industry have been talking about, when is this ending? When is, are we in the ninth inning? Are we in? I'm like, dude, where we're no longer playing any sports at this point, wherever beyond sports analogy, we are in a whole different realm of, in a new cycle as it may in the, in the industry. I think it's a needed cycle. I think it's a cycle of correction cycle that has been needed for many years for at best to be a four years. Unfortunately it, it got here about three years. I don't want to say three years too late because the past three years has been the last three years. People made tremendous amount of money. And, and with that tremendous amount of money came a great deal of, of hubris, about deals and about doing deals and about expectations of what you make out of deals. 


 Jalal
 That hubris unfortunately, is probably going to lead to some very bad decision-making and have led to some very bad decision-making. And, and, but, that happens in every market cycle. You're going to have some bad decision makers that are going to pay the price. I think fortunately for the rest of the world, I think that people that will be paying the price for bad decision making are going to be, it's going to be limited to only a certain amount of people and not, it's not going to be pervasive across the population or across the economy because the economy in general actually is doing pretty well. Consumers are doing okay, other than consumer, other than like revolving consumer debt, we're loving consumer debt is, is pretty high, such as credit cards, but other than revolving consumer debt money is actually plenty full in the sidelines. There's a lot of liquidity in the market, whether it's from institutional liquidity or, or investor retail, investor liquidity, there's a lot of liquidity in the sidelines, which did not happen. 


 Jalal
 That was not the case back in 2008 and 2008, 2009, 2007. There was not a whole lot of liquidity. There was a whole lot of leverage. In fact, there's a whole lot of over leverage and not no liquidity. That's, that was the kind of the, the double-edged sword in 2007, 2008, that led to such a disastrous time. I don't think we have that right now. I don't think we have plenty of liquidity. We have a lot of awareness about, debt and leverage. I think we'll, we're, we're definitely in a change, but not the kind of change that's going to lead to any disasters for at least for the greater economy. 


 Josh
 Okay. Right now you guys are code jeeping deals, right? You step into a code GP role, and then you go to your institutional relationships and you get them to see different deals and write big checks. What's a typical check size that you and your group have brought to the table for a code GP deal. 


 Jalal
 It's a big range, but our sweet spot, it usually happens to between, I'd say 3 million and 15 million that's typical of the majority of the deal, more than 50, 60% of the deal fall into that range of three to 15 million. Of course we sourced deals that are in the 30, 40 million range of equity. We're even working on a couple of deals now that are for funds where we're sourcing upward of 50, $60 million. There's no really cap on how much money we can bring to the table. And, and, and on the low end of the table, I mean, if we're sourcing from our institutional sources, it has to be in the minimum of three or 4 million a butter for doing it from our own. If I'm Koji GP. When I say we, I mean, he, when I'm Koji peeing on a deal, myself and signing on the dotted line, I can do a deal as little as one or 2 million and kind of bring my own investors to it. 


 Jalal
 I'm talking about equity, not, not deal size, equity size. 


 Josh
 Okay. Got it. All right. Let's just say we meet at a coffee shop or something like that. And, and we get to know each other and I'm like, man, I really want to get into cap raising. I really want to work with institutional investors, very sophisticated investors. I've cut my teeth in maybe other type of investment groups, private equity or accredited investors or whatever. Right. Fill in the blank. I want to go institutional, will you mentor me? We teach me like, what's baby, step number one, you say yes. You're like, all right, Josh, here's the first lesson to get into institutional capital. What's that look like? 


 Jalal
 The first step is not say more than, not pretend to know what you don't know, always. If you don't know something, don't pretend that, it just don't because it's not going to end well for you. It's, it's yeah, there are a lot of guys out there who will fair it, that stuff in a heartbeat. If you start sticking your, your foot in your mouth and pretending, something you don't know anything about just don't still, be humble. You know, you know that you have a lot of learning ahead of you and, and it starts at the relationship level. Everything starts with the relationship level. We, we are driven by the relationship we build on a day-to-day basis and the relationship we harness and continue to, to have and hold dear for future purposes. That's, that's where it really moves. It moves things forward at the end of the day. 


 Jalal
 I mean, w if I do, I know how to spreadsheet something better than you, or how to spreadsheet you something better than me, or, have you had a background investment banking more than me or whatever, that's, that might move the needle marginally. What, what ends up moving the needle is your ability to relationship build and your ability to learn and your ability to stay humble and keep learning and be coachable. 


 Josh
 Got it. So keep your mouth shut. Don't talk about stuff you don't know humble. And it's all about relationship building now. Isn't that interesting that as we're talking about like deal making and big deals, right? Like three, 15 million, like these are decent sized deals, right? We didn't talk about like, being able to look at cap rate, being able to do cost analysis. We do. You said that essentially the three most important skill are these, these things. 


 Jalal
 Oh, well, I mean, listen, these are most important, but that doesn't mean you can't do spreadsheeting of a deal. You can't look at you can't underwrite a deal or influence. I mean, if you can't underwrite a deal, if you can't look at numbers, if you can't look at the spreadsheet and make a discerning decision, whether that deals look good, or doesn't look good. If you don't know certain numbers, you have that's elementary. You're going to have to teach yourself that's not. These are what I mean is these are not the skills that move the needle. These are, these are almost as important as the skills as like, when you ask me like, well, how do we get into college? This is like me saying, well, you gotta know how to read. Well, I that's a given you have to know how to read, to get into college. 


 Jalal
 That's that's not how people get into college. I wouldn't say like, what's the best way to get into college. I w I'm not going to tell you, well, you gotta know how to read. You would assume that how to read, to get into college and same thing with here. You would assume that you should know the inner working of spreadsheets or numbers you have to know. That goes back to the learning and teaching. If you don't know these things, learn them and learn them well, and spend some time read books, take courses, educate yourself. It's, it's not just about necessarily a college degree or a fancy master's degree or anything like that. You can do a lot of that stuff right now, without anything, just either online or, take courses online to go be mentored by somebody. But you have to know these things. These are the basics that you have to know the things I told you earlier about what you should have, the skills, the relationship building. 


 Jalal
 These are, these are these, these nebulous skills that I, you can't teach. You have to, you have to have some of those skills, somewhat built inside of you. I can teach you numbers. I can teach I can teach you how to spreadsheet something. I can teach you how to, well, you gotta be coachable. You gotta be, you gotta be able to stay humble. You gotta be able to, to have that fire inside of you to keep going after it day after day. And, and I hate to say, you gotta be a nice guy. You gotta, at the end of the day, people gotta look at you and say, what? I like dealing with Josh. Like I, yeah. I'll pick up the phone. Josh is just a good guy. I like having a conversation with them. If somebody thinks that Josh had a******s going again, they're not going to pick up your call. 


 Jalal
 Have you. 


 Josh
 Been talking to my wife? Not just, I said, I agree. Well, I think people do business with people they know like, and trust. Right? I agree with you that there's these skillsets of relationship building and humility, right? Like those things are virtues. These are characteristics that are like surrounds around the person. I, I'm not the best on numbers, but I have a partner that does it, or I have teams that, that can help with those kinds of things. Being able to look at someone and build trust, I think is super cool. Let's just say you and I are going to go tackle some capital. All right, we're going to go. We're going to go make the ask. So I'm coming along. You're, you're mentoring me and we're going to go make the, make some ask. What, what are some typical ways into getting into new groups of institutional investors? 


 Josh
 Like, that you're going to deploy me through to go find some money? 


 Jalal
 Well, I mean, look, they don't, it's the golden rule for any relationship building or, I hate to say selling because I hate the word selling myself. I'm I, I have an aversion towards selling or being sold on something, but really selling at the end of the day is about finding out what's important for the other guy. You know, it's not about you. It's about because those are institutional guys. They, they don't need unless they do need you, unless you convince them that they do need you for something, they, you're, if you're bringing them relationships that they don't have, if you're bringing them people that they don't know, if you're bringing them avenues of ways to access the market, that they don't have currently. And, and you're going about it in a way where you are still, you can provide them more, as much value as their money, then you have an entry into a lot of those guys, it's, you can't go about it. 


 Jalal
 As of like, well, I have, I don't know, I have a database and I'm going to I'll blast it out and get you somebody to the table. I mean, where's the value there. Like what you have, you can have a bot do that for you these days and send out a crap load of emails and then see if something hits. I mean, that's not business development, that's just bot doing bought things for ? So, so I mean, you have to sh you have to show your value. However, however, the value that you think you could bring to the table, if you're somebody who has developed a, an amazing meetup group in a certain city like Phoenix, or Denver, or Charlotte or whatever, and you have God, you have like, 10,000 followings on that meetup group or something like that's value right there. That's, that's, it's something that, Hey, like, I'm, I am the guy to see you when it comes to doing deals in the Phoenix area, or I'm the guy to see who comes to do indeed deals in Tampa. 


 Jalal
 I, I know the market really well. I, and I have access to a lot of the sponsors and a lot of the deals. Let me see if I can bring you the right deal, where you can place your money at. I mean, that's one way to go about it. It, it, you just have to show what value you have to understand your value. That's probably first and foremost is you have to understand your value and be convinced of your value. And don't shell your shelf short, 


 Josh
 Be convinced of your value. Explain what you mean by that X be convinced of your value. 


 Jalal
 Well, because we sometimes don't really know what our value is in the marketplace. When we go out there, a lot of times we either undercut our value or we over or overshoot, our value. We think that we're sometimes the cat's me out and we're not, or the opposite of that. We think that we just like, oh, why would anybody listen to me when you have a ton of value that you can bring to the table? You know? You have to have a balance of that. You have to understand what your value is and what you can bring to that relationship. 


 Josh
 Yeah. It's a humble assessment of where you're at, right. It's Hey, don't think better than my, or don't think worse, just like, Hey, this is my, my, my buddy, Tim Katrina calls it a humble swag. That I'm really good at this, but I'm going to stay humble right. In my zone. 


 Jalal
 Just, just be pragmatic as is, is I would say better. I mean, you don't necessarily have to stay humble. I mean, it's okay. That took it to be flashy. I don't, I'm, I don't, I don't have anything against flashy. It's okay. To be flashy. It's okay. To be confident. And, and that's, that's great. That's a good quality to be confident and to be energetic and say, like, look, I'm, we're gonna, we gonna do this, that, but, but don't think that you can do something that you have not proven yet to yourself, that you can do, and try to sell that other person on things you haven't even tried yet. Like, I mean, you can, but as long as you have some way within you to note that you get away, you're like, okay, let me, I can plan it out in my head and I know what to do. 


 Jalal
 I know the steps that we grew on me. I have not have done it before. It's okay to do something you haven't done before. In fact, you should do things that you haven't done before all the time. You should always get yourself out of your comfort zone and do things that you haven't done before. As long as you have a plan, not just hope. Things will materialize out of thin air for you. 


 Josh
 Right now. You said 2009, you got your butt handed to you, right. You had to do a reset, go get a real job. Now, when a dealmaker takes a big reset in their life for me, I've been bankrupt. I've been on food stamps. I've been in venture capital, private equity, built some cool stuff, but also lost it and getting back up after getting knocked down. Cause you, be convinced of your value sometimes after getting your ass whooped, it's very difficult to know your value and you lose confidence. How did you get back in the game? Because you went from that to employ and now you're, raising institutional capital. What did that look like for you? 


 Jalal
 I don't, I, to me, I just, I didn't have a choice, but keep moving forward. Just to, I know I knew that I will get back up to being, an entrepreneur and at the helm of something and then driving something that I like and love. And, I knew it, I, even back then, I, so it's something that I knew inside that there was no other choice. Like, I don't really any job I had. It was, I knew it was somewhat temporary. And that's how I approach it. It's like, yeah, it pays the bills and that's fine. A lot of times it's fine. It's fine to take something that pays the bills. You gotta pay your bills, you gotta take care of your stuff. I mean, back then I had a, I had a newborn son and it was not an option for me to just stop and think, well, screw it. 


 Jalal
 I'm just gonna, I don't know. I'm just going to sit back and collect unemployment and just, and, and, I'll figure out something just to, just to get by, just to get, just to pay the bills. I don't, the comes up the concept of just getting by has never been something that I'm I was ever sold on or was ever in my mind. 


 Josh
 Yeah. Let's just say we're working on a big deal, 15 million bucks, and all the details are, are set. Everything's been agreed to by multiple parties by the investor group. All we have to do is get it signed, but we get to choose like the environment where we want to sign it. What's your favorite place to do a deal? It could be anywhere doing anything. 


 Jalal
 Favorite place to do a deal, or you mean like geographically or? 


 Josh
 Yeah, we're just going to connect with the investor. Hey, let's meet up here. Let's, let's sign it out. You're like, Hey, why don't we do it? And you fill in the blank. 


 Jalal
 I mean, I, I actually, I love Colorado. I love the Denver area and nothing. I think it's a fantastic area. I love, I love Boulder actually so much that I think it's definitely on the top five list of places that I might end up relocating after my son goes to high school. So, you know, 


 Josh
 We might do some mountain biking or skiing or snowboarding out in Colorado or something like that. Sign the deal. See, I was thinking, I was just, they get, maybe you'd say, base camp on peak 15. It would go, 


 Jalal
 I, I'm more pragmatic than that, ? I mean, that's a cool experience. Yeah. I'll take, I'll take a cool experience. Cause that's not like you asked what would be a cool place to sign a deal and like, be able to do business and do and someplace where I think it would be a lot of fun. That would be, that would be Colorado probably. Yeah, 


 Josh
 That sounds cool, man. Kind of explain what the stack looks like. Cause you mentioned a few key terms, right? So GP LP sponsor, right. Kind of explain what that looks like and what you guys look for in potential partners. 


 Jalal
 I mean the word GP just means general partner. The word LP means limited partner. A JV is just joint venture is I, I know we tend to kind of throw these terms out ubiquitously and we forget sometimes that what's second nature to us. It's not second nature to a lot of people out there, general partners are generally the people who are controlling the deals who are running the deals, general partners. The term is interchangeable with sponsor, general partner, a syndicator, all these three terms are interchangeable. To some extent, syndicator is just the person who's syndicating the deal, a sponsors the same way person who is sponsoring the deal. Those two happen to also be general partners in the deal. They're there it's the same term it's just being said differently. That's the person who finds the deal, who sources the deal, who has to gift the deal under control, who does the upfront heavy lifting of, whether it's due diligence or the legal steps to kind of lock up the deal and take it to market. 


 Jalal
 So that's who is the general partner. And, and a lot of times it involves also running the deal after it closes, meaning running the running point on asset management, running point on proxy management, depends what's vertically integrated. What's not, when I say vertically integrated, you might hear that term vertically integrated, meaning that company also does this and that. You're vertically integrated in our industry and multifamily, for instance, that means you also run your own property management group and you manage the property yourself that you buy. Not, not a lot of people, not everybody does that. A lot of people would be vertically integrated, but not everybody. That's not a prerequisite necessarily to growing in this business. Some people like to be vertically integrated. Some people don't I'm, were vertically integrated at Mac. In fact, we had another sister company that manage our assets for us called capstone, at peak 50. 


 Jalal
 I'm not, I don't want to be vertically integrated. I, I, I, I want someone else to run the deal. 


 Josh
 Yeah. What's your favorite part of a deal? You're coming in, I'm bringing you on, to work on a project with me. What's your favorite part of the deal? 


 Jalal
 Favorite part of the deal is, is making it work. So, not just finding it as cool as one, one like the first step of the coolness process. The second, the majority of the coolness processes is making sure that everybody agrees that this deal is as cool as we thought it was, and then writes the check for it and brings it to the closing table. So, the, the really the, I think the most euphoric part of the deal for me is when all parties agree and there's, we know that there's a deal in the making, even if it's not yet signed on the dotted line, that's really the most exciting part of the deal for me. Obviously the assignment has to continue into the closing because no deal is done until money's in the bank and check and write checks in hand. And, and the, it's, the signatures are on the dotted line. 


 Jalal
 And, and I know that firsthand, I mean, we, you, you can get excited about all the other stuff, but unless that happens, unless money's in the bank and this and that, and the paperwork are signed, you ain't got a deal yet. 


 Josh
 Yeah. Awesome. Awesome, awesome. Awesome. If I, if I grabbed your phone and look through your, your favorite song, right. That's been playing for the last 10 years, the, the top song in your playlist, what song would that be? 


 Jalal
 That would probably rage against the machine. 


 Josh
 Oh, nice. Yeah. 


 Jalal
 Yeah. You'll probably find more frequency of me playing rage against the machine, on my phone than any other band. 


 Josh
 Awesome. If you could see any, I love these kinds of questions, cause it kind of gives me an idea as to how you operate and what goes on in your head. If you could see any band alive or dead, right. If you could have a private live performance from any band in the history of mankind, who would it be? 


 Jalal
 Let me rage against the machine or Pearl jam. 


 Josh
 Ooh. Yeah. I like Pearl jam on. 


 Jalal
 That. I mean, either or, I mean, I grew up, I'm a kid of the nineties I grew up on, on, I mean, I, I was at the early Lollapaloozas with, Alison chain and Pearl jam and rage against the machine all in one venue. Yeah. It's, it's not an experience that you can duplicate. Yeah. So. 


 Josh
 W when you guys are, you mentioned where you guys are, where are you guys located? Where's headquarters copy. Where do you guys do deals? Do you guys only focus on a certain area of the world or, 


 Jalal
 We don't, we are geographically agnostic to some extent, as long as it falls into the smile area of the, of the United States, meaning Southeast Sunbelt and Midwest, that perfect smile in the United States. 


 Josh
 Smile part of the unit I've never had before. Awesome smile, the Florida. Okay, cool. When you're looking at a deal or meeting with a group, what are some, because a lot of times you're working with institutional investors. You're looking for cool deals to co GP on cool deals to participate on and help bring a, a decent sized check to the table. What are some red flags that you see when working with a, a sponsor or something? You look at it, you go, oh, red flag, we're pulling our money and walking away. 


 Jalal
 Well, I think the underwriting is a big thing for us. We're we are really like underwriting geeks and we like the numbers. And, so I have, there's two people that I have that are going through the numbers before it gets to me. The, we have a, w we have to, those numbers have to make sense. If we see a deal that comes through from the sponsor and their underwriting is complete rubbage, then that's the first and biggest red flag, because I can't take that to anybody. I can't raise money based on that. I can't, I will not put our reputation on the line by sending, garbage to somebody else to take a look at and for them to come back to me and say, John, what in the world, why did you send this crap to me? So, so that's the biggest red flag. Probably the, the one red flag that will, did not, will have us not taking a relationship. 


 Jalal
 I don't know, and we've done it before. We've said, yeah, this is great. We wish you the best of luck. I think you guys are still have some growth to do, and, w w nothing against you, but, look us up when you get to a certain point in your maturity, I would say, yeah. 


 Josh
 Yeah. A group, a, if they want to deploy some capital with a, with a group like yours, let's look on the institutional side. What, what are some ideal partners that would be institutional that would want to leverage with you? What, what did they look like and what can you do for them? 


 Jalal
 Yeah. I mean, the word institutional sometimes is I wouldn't say misunderstood because sometimes I think when people think institutional, they think like pensions and endowments, and that's not necessarily the only thing that is encompassing in the institutional world, our institutional investors are folks that are either sometimes large family offices, mid sized family offices, private equity companies that have their own dedicated discretionary funds, larger, private equity companies that have a, a lot more money than smaller guys, hedge funds. Of course it does encompass the, your endowments and pensions and, and all that. And, for some of the larger checks, what they look for again, it's about, it's gotta be the return profile of the deal has to look right. They geographic preference vary from one group to the other. Some, some of them don't have a preference. Some of them do the sponsor always makes a difference. 


 Jalal
 Always makes a difference. Always makes a difference. The sponsor themselves, they don't necessarily have to be, they don't have to have thousands of doors behind them. They don't have to have 10 years experience behind them, but they do have to know what they're talking about. They do have to present themselves as they have a very well thought out business plan. As to what to do with this deal, how to handle it, they want to know that, your steps. I mean, they, they want to know that they, if they were to write a check for you for millions of dollars, that what to do from day one, day 60. If you don't, then that's a red flag for them and they probably will not invest with you. 


 Josh
 Yeah. You take a look at these things prior to it hitting their table, right. So you're looking at underwriting. Does the deal make sense? What, what does it look like for the investors? And you're looking through that. If you see that it's a, not a good deal through underwriting, you're going to S you're not even going to bring it to the investors, because that would tarnish your relationship. Like, why are you bringing us this crap? This doesn't fit our deal criteria doesn't even make sense. Right, 


 Jalal
 Right. 


 Josh
 On the flip side of that, have groups ever come to you and said, Hey, we have this deal. We don't know how to properly underwrite this or get it to institutional. Do you ever work with those kinds of groups on fixing the deal or make the deal work? What does that look like? 


 Jalal
 Yeah, absolutely. I mean, we've, I mean, we've had groups that have come to us and said that, listen, I, were wide open, take a look at our underwriting. If you think there's room for improvements, let us know where we can do that. If we need to collaborate on something, we can do that as well. If we need to coach GP on something every now and then again, I, I mentioned that co GP opportunity with us, we're actually launching a co GP fund next month, where we'll actually start proactively, hopefully by the fall start doing some, some code GP ourselves with sponsors that come to us with deals that need to either a, and when I say called GP fund, w the purpose of our call GP fund is mainly to provide GP pursuit, economic, intuitive deals. So, because in every deal, when you source the equity, you, as a sponsor have to put in, or as a syndicator or a general partner as a GP, you have to put in a certain amount of money into deal yourself. 


 Jalal
 Your own skin in the game that skin in the game is the GP pursuit costs, which would be anything from earnest money deposits to legal fees, to, down payment, whatever it might be, that money sometimes is where there's a, an opportunity to partner up with some folks who may either may not have it, or they may not want to necessarily, milk themselves dry by trying to have it. If they're, if they're looking at a $5 million equity check deal, for instance, the GP pursuit on something like that would be anywhere between 500,000 to a million, they may not have $500,000. That's where someone, a fund like ours would come in and write a check for that 500,000 and then still go out and raise the money for them. At that point that, we're in a partnership where we do have, we do come in on the GP side of the equation for that. 


 Josh
 Got it. You call that the GP pursuit costs. 


 Jalal
 If you pursue costs. Yeah. 


 Josh
 All right. Break that down about what other fees or costs might be in that GP pursuit and why what's the benefit, what's a good fit for a GP co-fund like yours, and where would it not be a good fit? 


 Jalal
 W the GP pursuit costs are essentially what you are your costs as a GP, what you were going to put into the deal yourself. Okay. So, and that becomes especially more important. If you're going to go and raise equity from institutional sources, it is less important if you're raising equity to just from the retail investors, because you can play with that equation a lot more with institutional investors. They're going to want you to have anywhere between 10 to 15% of your money into the deal. Most institutional investors usually will bring anywhere between 85 to 90% of the money to the table of the equity stack to the table. If let's, let's speak in more simple terms, if we're talking about a let's call it a 30, $35 million deal, and million of that is equity 20 million of that is debt out of the 10 million of equity that is required for the deal. 


 Jalal
 You, as the general partner, as the sponsor of the deal, we'll probably have to come up with a million bucks yourself, at least to go into the deal. That million bucks could be from a, in a variety of, it could be from the posit. It could be from legal fees, could be from fees to lock up the lending. I mean, ton of things go into that kind of GP pursuit costs that would go into it. It's, it's essentially pursuing the deal and what it, what it would cost you that's where we, that Delta is where we would come into to kind of fulfill with our code GP fund. 


 Josh
 For our group, a sponsor group, that, that has a good deal on the hook, and they just need some help get an over the, get over the hump to meet the core requirements, to go after institutional. That's a, a good bridge working with a group like yours. 


 Jalal
 Yeah. I mean, and it, I mean, there are other factors, obviously. I mean, if they're, if they can, they qualify for the loan themselves, do they need experience? Do they have experience? Do they, there are several factors that sponsors have to look for when they're doing a deal. Obviously the experience of the sponsor is huge, whether you're, whether it's for lending purposes or for equity, institutional equity versus because institutional equity also want to know what kind of experience that the sponsors have, what their background is, how have they've done the deals, what they've handled before, where they came from that kind of stuff. The experience of the sponsor is important. The, the, obviously there's a net worth requirement for the lending part portion, somebody has to sign on a deal that is, that have some net worth liquidity requirements on a deal for lending purposes that may or may not be necessarily a co GP that could be them, or they could bring on someone from the outside completely. 


 Jalal
 That is not even a, that's not part of the managing GP entity. That's just could be a KP, a key principle. You can bring in a key principle to sign on the net worth of the deal without them having to be necessarily a day to day co GP with you. All these things should work in concert when you're trying to source money for a deal. When you're trying to source a deal, what I think you asked, what wouldn't work is that what you said, what would work and what wouldn't work with. 


 Josh
 What kind of groups would not be interested in a co GP situation or GP fund? 


 Jalal
 I mean, a code UPC too. I mean, if you're a well-established group, if you're a well-financed group, if you are a group that likes to have control, you may not want to go GP, and that's fine. You just want the money. You don't want to go GP. I mean, you'll take a good GP from an institutional source, but you don't want another code GP, right. Like me with you'll just, you're okay. You've got the, you've got the experience. You got the background, you've got the money. You got, you got the, the SVO schedule, you got a net worth. I mean, if you've checked all these boxes yourself and you really don't really care about having another partner with you, then that wouldn't be a good fit. 


 Josh
 Yeah. As you're, as you're doing this, you guys, focused on industrial multifamily, student housing, are there other, any other niches that you guys are willing touch or take a look at? 


 Jalal
 I mean, as long as it's in the commercial real estate space, we'll look at it for sourcing capital. We'll look at it for us to code GP, to partner with the sponsor. It has to be in multifamily. We only do a multifamily, whether it's ground up or stabilize assets or whatever, I don't care what of what it is, but it has to fall into multifamily space for us to go GP we'll source equity, for whatever kind of deal it is, as long as it falls into the commercial real estate space, whether it's industrial office, self storage, we'll do all everything under the rainbow, but we will not partner unless it's, we will not partner ourselves unless it's a, multi-company. 


 Josh
 Got it, got it. As you're, as you're learning and growing yourself. In terms of mindset and personal development, what do you, are you working on anything right now for your own personal growth? Like, are there any resources that you're diving into learning more about? 


 Jalal
 I mean, from my own personal growth, I, I, I personally have a personal coach. I have a therapist, I, I, I, so, it's, I, I like to always try to keep myself in check and keep growing and in all different ways and more nebulous ways than just business. So, it's not just personal growth is not just learning numbers and learning, how to do a deal. Personal growth involves so many other aspects of our personality. So, because everything else you work on within yourself will help you get to hopefully a better next step within yourself. That doesn't necessarily mean more money or more business or any of that. It has nothing to do with it. Personal, personal growth is not equating to personal net worth. A lot of people sometimes making the mistake of equating those two in the same breath. And they're not. 


 Josh
 Yeah. If you had to look back in the last couple of years of your life, what is a milestone that you've achieved in your personal growth like that you've overcome something or a walk through some adversity. What's something that you're proud of that you've accomplished in the last couple of years? 


 Jalal
 I think they probably, I I've come to understand myself and have a better sense of boundaries. I used to have a little less sense of boundaries, meaning that I used to give people a lot more leeway than they should. I used to take a lot. I used to say a lot more yeses than I should have. I used to let people give me less value than I'm worth. All of that have gotten better much better. I'm certainly not were not there. I don't know if I'll ever be there because personal growth is a continuous journey. It's not something that there's no destination in mind. The destination is what I'm six feet under. There's no, I don't want to, I'm not in a hurry to get to that destination yet. So yeah. Personal growth is a continuous journey. It's, it's like, it's like a painting that never has never done, and yeah, for me, , understanding my boundaries, understanding my net worth, understanding my value, understanding what works and what doesn't work, understanding how I can communicate those boundaries and to others and kind of be truthful to myself a lot more. 


 Jalal
 That's, that's kind of been probably the biggest journey for me for the past two or three years. 


 Josh
 Yeah. Super cool. I'm working through the same thing right now is boundaries. Boundaries, and focus for me is like, what, where should I put my focus and invest my, energy resources and such. The boundaries of like, I'm a, I love people, right? I'm a people pleaser, I've got tons of relationships and you could get easily pulled very quickly into a project or to help someone and to invest in someone. They might not even invested in themselves. Some I'm working through boundaries, right. This very minute, man, 


 Jalal
 Andrea is a big one. Boundaries is big on boundaries, a big one, especially for, I hate to say it, but especially for people who would like to give more than their receive, because you ended up giving a lot more than you should. 


 Josh
 Yeah, my coach had to walk me through the process of like, I create codependent relationships in the past. Because I give, I give and I have a need to be needed. What happens is I create this relationships, so I'm unwinding and I'm learning a lot, but personal growth for dealmakers is so vital. I find that I hit a ceiling in my money, in my business success or whatever, wherever my mindset ceiling is, that's where I'll hit. Whatever I'm working on, my personal development, that's the ceiling I'm going to hit with my wallet. 


 Jalal
 Interesting. It's interesting. They, they see it that way, but you kind of hit a ceiling with the, both of those things at the same time. 


 Josh
 Yeah. Yeah. My mine, I, I had daddy issues. I had mommy issues. I had, you know, trust issues. I had a self doubt, self worth, all these kinds of things that could come from a, a myriad of failures. I had to learn that, being a part of this game, that we're in this entrepreneurial game, that you're going to have a lot more ass weapons, then you're going to have home runs and it's okay to hit base hits every time. Those are great compounding interest and compounding success. It's like, yeah, I'm just learning a lot. I'm 40, I thought I would have all my s**t together at 40. I'm just learning to really get major traction in my life now. And it's. 


 Jalal
 Remembering, we're like 23, 24 and we thought 40 was so old. 


 Josh
 I was such an arrogant a*****e when I was 20 something unstoppable. 


 Jalal
 Oh man. If I can go back to my 20 something year old self, the kind of things I would whip my ass for. 


 Josh
 Yeah. Let's, let's play a game. You and me are like bill and Ted's excellent adventure. We get to jump on a phone book or a phone booth or whatever. We get to sit across from younger Jalala and Josh, and we could give the 20 year old self. They have to listen. Yeah. I don't know if I would have, but like, let's just say they have to listen. One piece of advice. What's that one piece of advice you're going to tell your 20 year old self. 


 Jalal
 Start investing in yourself early. 


 Josh
 Yeah. 


 Jalal
 That would be the biggest piece of advice starting investing in yourself and, time is time does have a limit for us humans. It's not, it's not unlimited, when we're in our twenties, we just, we don't even sometimes I, I don't, I know for me, I can't speak for everybody else, but I used to think time is unlimited. Like when you're in your twenties, like, yeah, you can do no wrong because life is endless where life is not endless. Life does have limits and you, if you end up, if I, if I knew about, if I knew about commercial real estate back then, or even the inkling of what I would have done in commercial real estate back then, I would have totally shifted the game on myself. That's why I'm constantly impressed with so many young people. I'm so pleased that there's so many young people in our industry are coming into our industry now more than ever young sponsors, young syndicators who are hungry or, who are knowledgeable or hungry for knowledge. 


 Jalal
 And, and they want to get things done and they want to get into the business and they understand the value of compound growth and, they understand the value of base hits. It's okay to kind of, take a base right now on a, a small asset. It's okay to start with a duplex or co-op Lex or 10 unit, apartment, and you don't have to go for from zero to 200 units, overnight. 


 Josh
 Yeah. Yeah. That was, that was my pride. As a, as a young guy was I gotta go for the grand slam. I got to go for the massive home runs. I met a lot of base hits. 


 Jalal
 Yeah, yeah, absolutely. Me too. Me too. I mean, back then I was, my head was in the cloud about like, being on being more on wall street and getting things done and that world, and I was in venture capital at one point or another. That you were concentrating on the grand slams and that world is all about the grand slams. In fact, in fact, I think the whole engine of how they drive that world as they sell the grand slams. So, if, because if it wasn't for the grand slam, nobody would be in that world. 


 Josh
 Yeah. Yeah, no, I, I think man, such a cool conversation as a deal maker and I've interviewed probably plus a thousand entrepreneurs over the years of doing these kinds of shows. I realized that it all comes back on like invest in yourself. Like, nobody ever says, I wish I would have gone back and invested in Google. Like, yeah, that'd been cool. Or apple. Yeah. You'd have money, but if you don't have wisdom and you get money, dude you'll blow it. I would've, if I would've cashed out my first big deal and been a multi-millionaire at age 25, I would have bought a dirt bike, did a back flip and broke my neck. 


 Jalal
 A hundred percent, a hundred percent. And I did blow money back then. I mean, it, the thing we did blow money back then, I, we had, it's like, I didn't have money. We had some, we had access to money, but it was useless because I didn't have the knowledge set to know what to do with that money. 


 Josh
 Yeah. That the wisdom, right? Like riches with wisdom last generationally money, without any wisdom of the fool, it disappears, it escapes their hand book podcasts. What, what resource is your, is something that you've read recently or listened to that you thought was pretty interesting. You want to share with us? 


 Jalal
 Oh, I, I have an obsession with books, so I, my nightstand looks like it's, I can't even see my next embers. It's got like 20 bucks on it. Then I'm reading it. I'm trying to read at the same time, or I pick up a book and I'll read half of it and put it down, read another book and go through half of that and put it down. I'm reading two or three different books right now. I'm reading a book by Italian called Vino. I'm reading another book by, I forgot the name of the author, but it's, it's called how to, how to hold on. I'll let you know how to take over the world. It's, it's a pun. It's not looks like it's one of those things, different ways to how to be a super villain. I'm I'm rereading an old book called the diary of an economic Hitman that got republished recently or republics in the past couple of years. 


 Jalal
 Amazing book, fantastic book. I I'm rereading another old, one of my favorite pieces of literature of from Henry Miller called tropics of cancer. Yeah, I'm not, I don't just read nonfiction. I read a lot of fiction and nonfiction. 


 Josh
 No kidding. That's cool. As you're, as you're building out and you're building out peak 15, your code GP, and deal working with some cool groups. Like what does, how do you won? Like, what does you and I, 20 years in the future, maybe 40 years in the future, I got, I've got a good 40 years left of deal-making. We're sitting on the front porch on a rocking chair. I'm going to be sipping some bourbon or some scotch. I like scotch, what will you be drinking, ice tea or a cocktail? Like what will you have? 


 Jalal
 Yeah, I'll probably be drinking bourbon or scotch. I'm a brown liquor drinker. So cool. 


 Josh
 So we're. 


 Jalal
 Looking in the background there. So. 


 Josh
 Nice. What you got? 


 Jalal
 I have Buchanan 18. I have a, I have a Macallan and I have another single month. 


 Josh
 Well, when you come mountain bike riding, after we're done mountain bike riding, we might crack open one of ours and enjoy that together. We go forward 40 years and we look back and we're like, we did it. We accomplished it. What does that milestone for you? 


 Jalal
 I, it, we did it accomplished it. I think probably the fact that if I look at my family and my son is stable and successful in life. And, that's an, a huge accomplishment for me. That would be something that would definitely send pride enjoyed for me. Whether I have, whether I'm sitting in, I have a ton of capital myself or a ton of deals or a ton of properties, or, if, if the people that I care about the most in my life are happy and, and healthy and wealthy. That is a huge accomplishment for me. For me, if it, I w ideally for me, I'm probably, I'll probably have like a, I don't know, a mountain house somewhere that have access to a lake and have access to good trails probably by then. I'll probably be tool to mountain bike. I don't know. I might just, you might have to content myself with just walking or hiking on trails at that point. 


 Jalal
 Yeah. Maybe have like another, I don't know if, since we're going ideal universe here, maybe I'll have another peer to tear somewhere else. Like a, a cool city like Savannah or, I don't know. 


 Josh
 Yeah. It sounds super cool. All right. Let's say your boys in the neighborhood of 10 years old, right? 


 Jalal
 14 0 14. 


 Josh
 Okay. Let's just say he picks up this podcast and he gains, like, you can share one golden piece of wisdom with him for his future. Right? Like he you're like son, listen up. If there's only one thing you hear on this podcast, I want you to hear this. What, what's one piece of knowledge that you'll knowledge, wisdom, advice that you'll pass your son right now, 


 Jalal
 Trust in yourself and continue learning all the time. You always, always be thirsty to learn and always stay humble. 


 Josh
 Yeah. Super cool. Super cool. Shout out to your boy and then shout out to one of our friends, Dave, he connected us a super cool guy. I appreciate the connection there. Yeah, 


 Jalal
 No, I appreciate Dave's connections for sure. He's a, he's a super cool guy. Him and I are actually talking about doing a couple of cool things together as well. 


 Josh
 Awesome. Awesome. Awesome. Awesome. Let's do this for people for deal makers who want to connect with you. What's a good place for them to connect with you and do a deal. 


 Jalal
 They can find me on obviously email. My email is asr@fifteencap.com. ACA are@peakonefivecap.com, or they can go to the website, beak, 15 cap.com. They can find me on LinkedIn. They can find me on Instagram. They can find me on the mountain trails, 


 Josh
 Rage against the machine, or Jeremy riding his bike around. Are there any questions I should've asked you that I completely screwed up and didn't ask you? 


 Jalal
 No, I think, I mean, I think you've covered it. I think the one thing that a couple of exciting things, again, we have coming up that we're launching in the next few months that we'll be hopefully ready to market by fall or so is our Koji B fund. That will be a fantastic instrument for sponsors to be able to, if they want to partner with us and, and do more deals and bigger deals. And, and we're also launching a mastermind in the fall as well. That's one thing I'm launching with Dave, actually that will be, that will also be launching probably sometimes in the, in the fall time. 


 Josh
 Awesome. Awesome. Awesome. Awesome. Ladies and gentlemen in the audience fellow as always reach out to our guests, say thank you for being on the show. If what they have is of interest to you, connect with them, all their contact information will be in the show notes below. You can connect directly with them and do a deal. That's the purpose and mission of this show is to put deals and deal makers together. If you're working on a deal and want to talk about it here on the show, head on over to the deal, scout.com, fill out a quick form, get you on the show next till then talk to you all on the next episode, loving. 

John Azar Profile Photo

John Azar

Founder/ Managing Partner

John is the Founder and Managing Partner of Peak 15 Capital. A capital advisory and syndication firm servicing commercial real estate operators and sponsors in securing their equity capital stack as well as Co-GP on their deals through the Peak 15 CoGP fund.
John is also a Managing Member of MACC Venture Partners, a Southeast focus owner/operator of multifamily assets. In his leadership of Peak 15, he directs strategic development, investor and client growth, and new acquisitions and syndications. He also heads the investment committee, capital management and growth. John is also the head of the Peak 15 Coaching program for new syndicators and sponsors.

Previously he was a co-Founder and Managing Partner of Boston Venture Partners (BVP), a private equity consulting and finance firm based in Boston specializing in real estate development, and structured finance. At BVP he worked on a cumulative portfolio of $1.8 Billion spanning from Boston to Miami as well as London. His previous roles as an equity trader and commercial banker in financial institutions and banks such as Bank of America and Morgan Stanley provided an integral understanding of debt and equity markets as well as deal structure, honing his skills and insights into the critical planning issues relevant to growing successful companies.

John is a podcaster and Co-Host of his own podcast called Breaking Resistance as well as being a regular guest speaker in various commercial real estate conferences and Podcasts. John serves on the boards of directors of several non-profit and for-profit organizations including Gaston College Foundation, and previously The Charlotte Symphony Orchestra board. He holds a BA from the University of North Carolina, Charlotte and an MBA from Boston University Questrom School of Business.