Profile: Fred Sands – Investors

0



Expanded profile of local brokers and other dealmakers in commercial real estate still making a go of it despite the down market:

Many real estate moguls with a first act on the level of Fred Sands’ would not be inclined to give it another go, especially in the current recession.

But nearly a decade after selling his namesake residential brokerage to Coldwell Banker for a “nine-figure” sum, Sands is on a roll again now with investment and development.

A few months ago, he purchased SouthBay Pavilion, a 1.1 million-square-foot mall next to the San Diego (405) Freeway in Carson, adding it to a growing stable of 13 assets mostly in Southern California.

Sands has big plans for the property he bought for $50 million from Hopkins Real Estate Group. He wants to add a 16-screen movie theater, install large freeway signage and add tenants. He plans to spend as much as $30 million on upgrades; the plan is consistent with Sands’ desire to be a “redeveloper” who can add value to aging properties.

“We are buying malls because nobody wants them, but malls aren’t going away,” he said. “We don’t buy property that doesn’t cash flow up front. That’s why I don’t like ground-up development. Ground-up development is a wonderful ego trip.”

Sands, 71, started Vintage Capital Group LLC in 2001, shortly after selling Fred Sands Realtors the year before. While Sands has made a variety of moves in the last decade, such as starting a private equity fund that makes non-real estate investments, his focus now is on the real estate arm of Vintage Capital, called Vintage Real Estate. It has allowed him to be a contrarian, first by selling properties in 2006 and now by buying others.

Sands has long been interested in investment, but when he first got into the real estate business he didn’t have the capital to pursue it. So, he started his brokerage instead.

“The thought was the brokerage part would be the cash cow to feed my balance sheet. It became a major distraction,” said Sands, who grew weary of having his name attached to what became the largest independent residential brokerage in California.

“I was overexposed. Guys would look at me funny when I’d see them in social situations. I got fed up with it,” said Sands, who lives with his wife in Bel Air, a short-drive from his Brentwood offices. “I am not a movie star. It was great getting restaurant reservations but I just wanted to be low profile.”

Sands also sold because he said he became convinced a residential crash was coming. It just took longer than expected.

“I thought the market would last maybe another couple years, but I figured it was time to leave on a high,” he said. “I thought that what happened now would have happened sooner; it’s amazing how long it lasted.”


FRED SANDS

, 71

Founder and Chairman

Vintage Capital Group LLC, Brentwood

The high-profile former residential real estate mogul has changed gears late in his career, founding Vintage Capital, which invests in retail properties and has other businesses. He’s done some big recent deals, including buying the SouthBay Pavilion in Carson.

Biggest Challenge: Obtaining new financing.

Notable Recent Deals: We recently purchased the SouthBay Pavilion, a 1 million-square-foot mall anchored by Sears, JC Penney, Target and Ikea.

Toughest Recent Deal: Putting financing together on the SouthBay Pavilion. We assembled a small consortium of lenders to complete this transaction.

Secret of Success: We have capital and lenders who like what we do and we are not highly leveraged.

Sage Advice: Having been through numerous real estate cycles in my career I am heeding lessons learned. Know where you are in the cycle. Hope for the best and prepare for the worst.

End of Downturn: We will crawl out of this one. The wealth effect is gone. High levels of credit card debt and the loss of home equity have eliminated the net worth of many consumers.

Recession’s Silver Lining: Great opportunities to acquire commercial real estate and notes secured by real estate.

Stress Release: My wife and I love to take a lot of vacations and recently came back from Turkey.

Recent Splurge: Haven’t given up much at this point and my wife certainly hasn’t. I collect contemporary art and have been acquiring some great pieces by iconic artists at attractive prices.

No posts to display