Stonestreet Partners, LLC (“SS”) is a privately-owned commercial real estate advisory company and property management company based in Chicago, Illinois. SS was formed in 2009 by experienced real estate professionals focused on institutional quality real estate.
Over the last 35 years, Principals of SS have owned, managed, developed, redeveloped and financed over $3 Billion of institutional-quality real estate and operating companies. SS closed its first purchase in 2012, with the acquisition of the Trilogy Realty Income, LLC (“TRI”) portfolio, consisting of six diverse Walgreen properties. TRI was formed to take advantage of what it perceived to be a significant arbitrage opportunity caused by a market over-reaction to Walgreen’s decision to reduce its annual new store development program coupled with a significant tightening of bank lending in the high-quality single tenant retail property asset class. In addition, SS identified a relatively higher and more stable return opportunity relative to other real estate investment opportunities at a relatively low cost to the investor. Historically, investment participants in this market segment were predominantly highly-leveraged and/or tax-driven private investors. Significant reductions in lending and loan proceeds and structural deficiencies within tax-driven investment funds resulted in an almost immediate exodus from these former market leaders. Further, SS noticed an unmistakable trend of larger, institutional investors (who historically are unable to meaningfully penetrate this market segment) becoming increasingly focused on current yield investment strategies. The reduced cash positions at many of the nation’s largest corporate and governmental pension/retirement funds increased significantly the risk that these plans would be unable to meet contractual liabilities to its plan participants.
Recent global economic weakness, continued declines in business confidence, and increased market volatility has resulted in significant pullbacks of capital flows to higher-risk investments, causing the resultant flow of funds to lower-risk, higher-quality investments. We foresee a continuing period of economic uncertainty and continued volatility in global and domestic capital markets, which we believe bodes well for an investment strategy targeting higher-quality, lower-risk “hard” assets, where overall capital market risks are mitigated by excellent physical locations, tenancy of stable, financially strong companies that are indisputable market leaders operating in high barrier-to-entry markets that support performance that transcends volatile economic and capital markets, and where properties can be acquired at attractive entry points that equate to substantial discounts to intrinsic value. SS believes there is currently a window of opportunity to execute this strategy and achieve superior returns within a relatively short holding period while providing solid current income.
SS is exclusively focused on the high-quality and institutional grade segment of the commercial real estate industry. It is increasingly evident that many of the leading investment advisors are having difficulty differentiating between operating as an investment company or a real estate company – and communicating this to the market. SS’s investment plan clearly defines to the market that we are an investment company first and foremost. Our approach in evaluating investment in real estate funds and companies requires a thorough understanding of the strengths and weaknesses of real estate as an asset class in a diversified portfolio context and in comparison to alternative investment classes (equities, bonds, alternatives, private equity, etc). We view real estate as an asset class that has the following characteristics and attributes:
Valuation of commercial real estate is inherently inefficient. Arbitrage opportunities between public and private real estate markets will continue to be available to the skilled and prescient investor.
Real estate is highly cyclical, with protracted up and down cycles. Initially driven by fundamentals followed by lumpy and volatile capital flows.
Real estate is primarily an income vehicle, possessing bond-like current income levels with a modest expectation of capital growth.
Real estate is a not a commodity; rather, it is a unique asset class and every individual asset requires a balanced strategy and complementary executions of property (localized) and capital (global) markets.
Leverage must be applied prudently and cautiously limited to yield and valuation considerations. Capitalization strategies necessarily need to be in sync with property operating strategies. Long-term financial success of an investment.
The continual recognition, disclosure, and proactive management of risk are the key drivers of financial performance.
The interests of our clients and investors always come before the interests of management. We cherish our role as a fiduciary and recognize the need to successfully meet or exceed the responsibilities of that fiduciary role as the measuring stick of success.
We have a corporate responsibility to our people and our communities. We encourage and promote diversity within our organization and encourage and support the involvement of our employees in civic and philanthropic activities.
David M. TrandelChief Executive Officer
Mr. Davd M. Trandel is currently the Chief Executive Officer and Principal of Stonestreet Partners, a privately held real estate advisory company.
Prior to Stonestreet, Mr. Trandel was the Vice Chairman and Chief Operating Officer for The Prime Group, Inc., focusing on Acquisitions, Capital Markets, and Business Development from 2003 to 2011. During Mr. Trandel’s tenure, Prime became one of Chicago’s most prolific real estate companies developing and owning over $900 Million of institutional- quality real estate.
Mr. Trandel has over 35 years of capital markets, investment banking and securities industry experience and has invested or participated in excess of $2 billion of private investment, and third party debt and equity placements. Before joining Prime, Mr. Trandel served as President and Chief Operating Officer of Advanced Equities, Inc., a Chicago-based investment banking firm.
Mr. Trandel began his career with L.F. Rothschild, Uttenberg & Tobin in 1987. Mr. Trandel also served as a Vice President of Lehman Brothers and Bear Stearns & Company before co-founding Madison Securities, Inc. Mr. Trandel holds a B.B.A. in finance and economics from the University of Iowa and is a graduate of the Executive Education Program from the Wharton School of Business of the University of Pennsylvania.