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May 28, 2025 · 1 hr 9 min

Santa Monica’s Biggest Private Developer | Adrian Berger & Cypress Equity Investments

With Adrian Berger — Managing Director of Acquisitions, Cypress Equity Investments

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What does it take to scale in one of the hardest development markets in the country? In this episode of No Vacancy, Taylor Avakian sits down with Adrian Berger, Managing Director of Acquisitions at…

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What does it take to scale in one of the hardest development markets in the country? In this episode of No Vacancy, Taylor Avakian sits down with Adrian Berger, Managing Director of Acquisitions at Cypress Equity Investments, who shares how he built his career across four continents and now helps lead ground-up development across Los Angeles. Learn how Adrian and his team are: - Making Santa Monica deals pencil in 2024 - Raising capital with creative Co-GP structures - Turning failed listings into 17 closed land deals - Navigating entitlement, risk, and off-market plays - Building real estate careers through relationships, not résumés This episode is a masterclass in sourcing, selling, and structuring. Whether you’re an aspiring developer or just want to understand how serious operators think — don’t miss it. Subscribe and Stay Ahead! Stay informed and empowered in the multifamily real estate market. Subscribe to the channel for exclusive insights, rental updates, and expert analyses on the Los Angeles market. 🔔 Don’t miss out on the latest trends and tips to maximize your property's potential: https://www.youtube.com/c/TaylorAvakian 📈 Connect with me: Website: https://www.thegroupcre.com/ Email: [taylor@thegroupcre.com](mailto:taylor@thegroupcre.com) X: https://x.com/TAYVAY_ LinkedIn: https://www.linkedin.com/in/tayloravakian/ #NoVacancyPodcast #RealEstateDevelopment #AdrianBerger #SantaMonicaRealEstate #MultifamilyDevelopment #CREStrategy #OffMarketDeals #RealEstatePodcast #TaylorAvakian #CREInvesting #RealEstateCareers #BrokerToBuilder

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Episode transcript

This 13,246-word transcript is matched to Whisper large-v3-turbo transcription of authoritative feed audio. Timestamps seek the episode player to the matching passage.

0:00–10:00

0:00

Adrian Berger

Yeah, I mean, Santa Monica is a small city. It's a coastal city. Ultimately, people want to live by the coast, you know, and historically, it's been a difficult place to get entitlements. And if you look over the last 40 years, the number of units delivered has been quite small relative to other places. We have a great reputation with them, a lot of trust there. We know how to navigate it. Yeah, we're one of the largest landholders and one of the largest developers there. We've built seven projects there. And another deal that's really, I think, worth talking about was one in Santa Monica, which was a small land deal, dollar -wise, but highly complicated.

0:37

Taylor Avakian

Welcome to the podcast. My name is Taylor Avakian. I'm here with my esteemed guest, Adrian Berger. Adrian, thanks for being here.

0:44

Adrian Berger

Thank you for having me. Absolutely. And pronouncing my name correctly. Appreciate that.

0:48

Taylor Avakian

Of course, of course. I know. Berger. I know a couple of burgers, but Berger, because you're from the, what do you call Australia? Not the mainland, do you?

0:58

Adrian Berger

I mean, the great southern land, I guess they call it.

1:02

Taylor Avakian

You're from down under.

1:04

Adrian Berger

I'm from down under.

1:04

Taylor Avakian

Yes. And you've had an incredible journey to get to where you are, which right now you are the head of acquisitions for Cypress Equities.

1:14

Adrian Berger

Yeah. So managing director acquisitions, Cypress Equity Investments, based here in Los Angeles.

1:19

Taylor Avakian

Give me a little bit of color around Cypress and the company.

1:23

Adrian Berger

So Cypress has been around for almost 25 years. It was founded by Michael Sorocinski, an ex -bankruptcy attorney. Started the firm buying existing small multifamily buildings in mainly like Koreatown, places like that. And scaled that pretty quickly. Ended up doing around 70 transactions between 01 and 05. Accumulated a portfolio of about 3,500 units. And then when the lenders were getting pretty aggressive back in 05, 06, 07, given his training as a bankruptcy attorney, he kind of felt like that was going to go to a bad place. And he managed to convince his institutional equity partners to exit, most of whom didn't want to do that. And they sold 80 % of the portfolio in 06, 07 and delevered the rest. So that's kind of how he made his principal wealth.

2:18

Adrian Berger

And he's an entrepreneurial guy, so he was doing some distressed investing in the down years. And then since 2010, we've been primarily focused on ground -up development of institutionally sized multifamily deals. LA has been our biggest market. We've built about 3,000 units. We have a pipeline of about 2,500 units right now. And then we've also expanded our footprint. Right around the time I joined, we were in 2015, we were looking to expand outside of LA. And we did that by providing co -GP capital to other developers around the U.S., but as an active co -developer. Okay. Coming in and, you know, providing money, obviously, but, you know, our experience, our Rolodex of institutional equity and debt relationships, providing balance sheet support, and really helping people scale. And we were able to sign up groups, you know, in various places across the country.

3:12

Adrian Berger

And today we've probably developed and operated in about 16 markets around the U.S. And then along the way, we've done a bunch of other things. We've developed self -storage. We developed a life science building as part of a master plan development we have in Boston. We've done some retail investing.

3:30

Taylor Avakian

Wow.

3:31

Adrian Berger

You know, on the multi -side, we do both market rate and 100 % low -income housing tax credit development.

3:38

Taylor Avakian

LIHTC.

3:39

Adrian Berger

Yeah, LIHTC and ACREHAB.

3:40

Taylor Avakian

That's a beast.

3:41

Adrian Berger

Yeah, which is a really interesting business. So ultimately, you know, we've been really a housing -focused firm, but not scared to go into other spaces and other markets. And we've done that really by providing, by being a co -GP. Like we, I think, take the position that we don't know a market that we haven't been in or an asset class we've never done before. So we'd rather partner with someone and learn it and then either keep doing that or go and do it on our own adventure.

4:11

Taylor Avakian

So what goes into being a co -GP? Because I understand GP. I understand LP. And I know of co -GP. But really, my understanding of it was typically it's someone who can sign on the loan, right? They have the balance sheet to be able to do that. And maybe some expertise or relationships. Can you explain the co -GP structure?

4:32

Adrian Berger

Yeah. I think there's two kinds of co -GPs out there. There's an active co -GPs and passive. So the passive co -GPs tend to be the groups that are kind of like LPs but want a slightly better return. And they will come in, you know, typically when the project is, you know, shovel ready or de -risked. And they're helping create the liquidity event for the GP, right? So the GP wants to free up dollars to go and do the next deal. And those co -GPs come in and can provide that. And those co -GPs are typically providing, you know, the majority of the GP equity and being promoted by the GP.

5:13

Taylor Avakian

Can you explain that a little bit more?

5:15

Adrian Berger

So, for example, like let's say, you know, we had a development deal and we wanted to free up some liquidity. And somebody came in and offered, you know, to give us 80 % of the GP. And then we say in return, okay, we'll give you 50 % of the GP profit, right? So we're promoting them. They're not getting a powery passenger return. They're not getting 80 % of the GP for their 80 % investment. They're only getting 50 % for their 80 % investment. Now, why is that a good thing for us? It's good for us because, or for the GP, because let's say that that GP check was, I don't know, $4 million for a $100 million development deal. Let's say you're getting back 3.2 million bucks. Like that's real money to go and do another deal, fund pre -development, pursuit costs, whatever.

6:02

Taylor Avakian

Why is it good for them?

6:03

Adrian Berger

They get to come in to a fully capitalized shovel ready deal that they took no risk on, the pre -development risk on. And they get to share in 50 % of the GP profit, which, you know, if the performer is right, which it's never right. But if it's, you know, you believe the performer, you know, it could be a worthwhile, you know, risk adjusted return, right? Versus being an LP. And also the check size is typically small. If you're coming in as a co -GP and you're writing a check for $3.2 million on a $100 million deal, you know, versus an LP is writing a, you know, a $40 million check.

6:39

Taylor Avakian

Interesting. So they get 50 % of the upside and most -

6:41

Adrian Berger

That's just one structure.

6:43

Taylor Avakian

But so for an example of that, because that's interesting. So they put in 3.2, right? You get your 3.2 out. So now you're 50 -50 on that quote unquote $4 million of equity on the upside. So you build it. It's worth $100 million, right? You then refinance or sell those scenarios. In that instance, because of the structure, let's just say all the numbers made sense, right? What happens when that actually occurs, that event, that capital event?

7:13

Adrian Berger

Yeah. They get another 2 million and - They basically like, obviously every waterfall is different, but in general, let's say the GP is earning a, I don't know, like a three times multiple on their total investment. So let's say $12 million.

7:30

Taylor Avakian

Yeah.

7:30

Adrian Berger

So everybody gets their capital back first. And then, you know, there's probably like one hurdle and there's a 50 -50 split. So -

7:37

Taylor Avakian

Got it.

7:37

Adrian Berger

They could be earning a two or three times multiple on their money. And usually if you're an LP, you're earning, you know, 1.6 to 1.8. If it's really amazing, you get to two.

7:50

Taylor Avakian

Yeah. Typically you're in that 1.6, 1.8 multiple, right? Yeah.

7:52

Adrian Berger

So it's an opportunity to really earn a higher multiple because you're in the GP position, not in the LP position. And then for, you know, for the developer or for the sponsor, it's great because, you know, your equity contribution is only 20 % and you're getting 50%. So you're making a really good promote there, right? So you're still getting half of that return, but your investment's 800 grand and you're still getting that same pretty high return. So it's really one of the things that has been incredible about my journey at CEI over the last 10 years, just learning really these really interesting financial structures.

8:30

Taylor Avakian

There's so many.

8:30

Adrian Berger

It's just, that's really, I think, such a big part of the business and figuring out like what investors want to be and what part of the deal and what risk they're prepared to take and therefore what return they're prepared to, you know, solve to. And, you know, we're a GP, so we're always on the front end of the risk spectrum, especially when you're a developer.

8:54

Taylor Avakian

Yeah. You're the last to get paid basically.

8:56

Adrian Berger

Yeah. And, and, you know, you are taking a lot of risk, but you're, you're doing it because you, you want opportunistic returns, right?

9:04

Taylor Avakian

Do you only, do you have to, do you go in mind with a site, a building you guys want to build that, okay, we're going to do this structure. We're going to go bring in a co -GP after we get all the entitlement risk and all that stuff done. Like, is that part of your, so we can unlock some capital or is it only if it makes sense or only if it happens?

9:23

Adrian Berger

I mean, it's been both. I think it depends where the market is. Like today to go and buy land, unentitled and closed on it is I think extremely risky because there's just no vertical equity.

9:34

Taylor Avakian

What do you mean by that? Can you explain that?

9:36

Adrian Berger

So, you know, the key to getting a development deal done, obviously there's entitlements and buying land and all of that stuff. And that stuff, if you're doing it in a greater LA where the zoning is clear and there is precedent for it and it's as of right and you're not doing anything discretionary, you're going to get your approval. It's really just a matter of time.

10:00–20:00

10:00

Adrian Berger

So we don't really view that as entitlement risk. It's kind of like more capital and market risk and the timing of that. So right now the institutional equity is viewing development as risky and also not the best use of their capital. Especially when the cost of building is now deemed to be higher than what you can acquire something for. And I think that's true, even though the volume of transactions haven't been that high, but like that's really where the valuations of acquisitions are. They're well below replacement costs. So, you know, if you're in the business of selling widgets, right, and it costs you a hundred bucks to build a widget, but it retails for $90, you're not going to manufacture widgets.

10:51

Adrian Berger

You're going to just go and buy everyone's widget inventory and try to make a margin, right? Like that's, it's the same thing in our business. So if it costs whatever, a half a million dollars per unit to build, you know, a structured podium deal in LA, but, you know, trades have been happening at 350 a unit in places like Hollywood, East Hollywood, downtown LA. It's just hard to convince capital to, to, to believe that your deal is going to be the one that's different to everything that's been trading. Now, I do think there are sub markets where that's the case. Like I think Santa Monica is a unique place.

11:28

Taylor Avakian

Which I think you guys have. Are you one of the biggest?

11:31

Adrian Berger

Yeah, we're one of the largest landholders and one of the largest developers there. We've built seven projects there.

11:37

Taylor Avakian

Why Santa Monica? Because people are like, Santa Monica used to be this place that was so beautiful. It was incredible on the coast, like had this aura and there's still a little bit of that there, but I would say for the most part, Santa Monica has lost its, its favor. So why do you believe in Santa Monica? Why do you feel like that's the market you guys want to be invested in?

11:58

Adrian Berger

Yeah. I mean, Santa Monica is a small city. It's a coastal city. So ultimately people want to live by the coast, you know, and, and historically it's been a difficult place to, to get entitlements. Um, and, and if you look over the last 40 years, the number of new units delivered has been quite, quite small relative to other places. You know, a few thousand units have been built in 40 years. Like that's not, that's not a lot of density that you're adding yet. You're talking about the demographics that are extraordinarily high household income earnings, um, you know, uh, house prices, education, educated population, all of the things that like really point to a strong sub market. And there's not historically been a lot of supply.

12:49

Adrian Berger

And so rents are the highest in consistently the highest in the city.

12:54

Adrian Berger

And when it costs more and more and more to build, you unfortunately need to get the highest possible rents to pencil deals. Um, and there's still land value in Santa Monica to justify development. I mean, there's no LP equity, but there is still fundamentally, you know, the performer is showing that, yeah, you can pay for land. Now it's down considerably from the peak, but it's still there. If you give me a piece of land in, I don't know, almost any other part of LA, the land's worth nothing. In some cases the land's negative value.

13:28

Adrian Berger

Cause the cost to build is so expensive and the rents just don't give you enough NOI to, to get to a financeable yield. So that's why we've continued to focus there. And also I think we've just had a lot of history there and had a lot of success and we've done, um, we've done, you know, by the book with the city, we have a great reputation with them. A lot of trust there. We know how to navigate it. And historically, a lot of people have come into that market and gotten burnt or, you know, ended up, um, figuring it out on the fly. And that can sometimes be pretty expensive. So we believe in it. We believe in it longterm. I think that it's a market that's just going to get better again. I think it went through a really bad patch.

14:13

Adrian Berger

I think COVID was very bad for Santa Monica.

14:15

Taylor Avakian

Yeah. I mean, you guys have a specific set of skills and knowledge. And I talk about this a lot too, with, with, uh, younger people who are interested in getting realist into real estate is a specific knowledge. Having an understanding of something better than someone else gives you a competitive advantage. And for, for you guys, Santa Monica, you have a competitive advantage because of the track record, the reputation, the communication with the city, those relationships.

14:42

Taylor Avakian

Which is something that I know you're very good at. And you've had an incredible journey to, uh, become someone who's built many, many relationships living in, I think, eight different countries.

14:55

Adrian Berger

Uh, five, uh, five, five cities.

14:57

Taylor Avakian

Five cities.

14:57

Adrian Berger

Okay. Okay. Which how many countries, one, two, three, four, four, five. Good.

15:04

Taylor Avakian

A ton.

15:05

Taylor Avakian

Um, which I'd actually like to talk about because I think relationships are the main thing that actually drives real estate. Um, you're creating and making things happen through relationships and people love to say you can be super skilled and super technical and have the best underwriting possible. And, but if you don't get the deal, if you don't have the relationships with the city, if you're not able to make things happen that are not just numbers, dollars and cents, a deal is not going to pencil. So can you tell me a little bit about one, your journey from Sydney, um, Australia, Melbourne, maybe to where you are today in Los Angeles and then how you've grown as a, as a investor to be able to build relationships.

15:48

Adrian Berger

Sure. I think that, uh, a good place to start is my, my mother tells me a story of how I was with her on a bus. I was about seven years old to my son's age and we're going somewhere. I don't know what we were doing, but we're, and we're on a bus. Like, I don't know why we're on a bus, but we're on a bus in Sydney. And I would just turn and start talking to the person next to me, a complete stranger. Yeah. And I think it was just, that was always my personality. You know, I'm the youngest of three. I have two older sisters. Um, the youngest in a family typically is trying to get the attention of others. Uh, and being the only boy obviously had, had a differentiating factor, but I just, I've always just been a little bit curious about people.

16:28

Adrian Berger

Like I've always found people to be really fascinating. I mean, I'm, uh, I'm a first generation Australian. My grandparents survived the second world war, survived the Holocaust. And my family ended up being sponsored by random Australian families in the, in the forties.

16:45

Adrian Berger

You know, my, my mother's family, uh, can trace its roots a thousand years in Hungary. Right. So I think just growing up in a place like Australia where no one apart from the Aborigines are really from, you know, and therefore everyone has a story. Like I've always just been really fascinated by those stories. And so I think part of connecting with people is just really trying to understand who they are and where they're from. And I've always been so curious about the world and traveled a lot. Even when I was young with my family, we, we always did overseas trips and Aussies traveled a lot. And so. You know, I think that's the best way to learn when you leave where you're from your comfort zone, your bubble, you know, where they make sandwiches a certain way and coffee a certain way.

17:27

Adrian Berger

And then, you know, you, you up and even travel or live somewhere where that is speak the language or the currency is different or the subway system runs differently. Like there's, there is learning in all of that. And that helps to like shape people. And so I just like, like collecting that information. You know, you're passionate about different things and you really get into it. Like that's my passion. People and places are my passion. And so when you have that kind of, um, starting point, you just want to listen to what people have to say about their story. And I think ultimately people trust sincerity and they want to, they people, everyone wants to share their story. You know, you asked me, do I want to be honest? I'm like, sure. I'll share. You know, like everyone wants to share a story and wants to talk about, you know, their

18:14

Adrian Berger

journey. So I think that's kind of where it started for me. And, um, I just, I didn't feel, I felt like there was more out there and that was sort of pushed me to be open -minded about taking my career to different places. And I started my career in engineering and even though real estate was more about families, business hobby. My dad was an attorney, but we owned some retail properties around Sydney.

18:39

Taylor Avakian

And so you were exposed to it.

18:42

Adrian Berger

I was exposed to it. I mean, I've got vivid memories of being in the backseat of a car, driving out to certain suburbs, going into, you know, a bodega style store. And my dad, like just casually chatting with the shopkeep. And little did I realize then, like he was looking at, oh, should he buy this building? So it was, you know, that was sort of a subliminal learning. Um, and I really came to realize that that real estate was more of a passion than a hobby when I was living in Asia. Um, I'd bought a speculative condo, uh, off the plan with two friends. We bought it. It was in Saigon, Vietnam. And we flew there for one weekend.

19:21

Taylor Avakian

And you just bought it from Singapore.

19:22

Adrian Berger

Yeah. We didn't buy the building. We bought a big Chinese developer was doing a huge 200 unit condo project and we bought one unit, right? Off the plan. Right. And we flew out there, me and my two buddies and their partners. And we had a weekend in Saigon, which was super fun.

19:38

Adrian Berger

And we went out to the site and looked at the dirt and looked around the area. We're like, okay, I, I guess this, this could be interesting. And we sort of took a punt on it. Right. So, um, you know, that really kind of, you know, I did the analysis on that for my friends, you know, and they were like, oh, you're in the wrong business. And I was like, hmm, that's interesting. Maybe I'm, maybe I'm doing the wrong thing.

20:00–30:00

20:00

Adrian Berger

And that kind of led me on a journey to figure out what I wanted to do and where I wanted to be. And I, you know, I had, um, spent some time in New York as an adult and had fallen in love with my time, with the city when I was there for like 10 days. I was like 24 or something. And I really wanted to live in New York and I wanted to do real estate. And so I ended up, um, figuring out a way to get there from, uh, from my seat in Singapore via Hong Kong to go work for the guy who I bought that Vietnam property from. Oh, so he had a, he had a company that was basically like going and doing bulk deals with developers around the world. It was an international real estate strategy and it was all based on macro and

20:43

Adrian Berger

micro economic data. And like, it was really actually well done. We put these big books together that talked about, you know, why Vietnam? You know, it was, it joined the world trade organization. It was becoming like the manufacturing alternative to China. It was a young population, like all of these really interesting things. And so this company had properties that was trying to sell in like Poland and Brazil and Turkey and Melbourne, Australia and London. So it was pretty cool. And I went to work for him, uh, with the idea of opening a U S office in New York. And I, I ended up moving to Hong Kong and moved to New York at December of 08, which was obviously a terrible time and sort of struggled through 09 and, and, uh, ended up, you know, pivoting away from that. Cause you know, that business, he didn't want to keep investing.

21:32

Adrian Berger

He was concerned, you know, about what was happening.

21:34

Taylor Avakian

Fair. Um, and I ended up, you know, figuring out a way to stay in the city and, uh, You became a broker.

21:40

Adrian Berger

I worked for a broker, you know, I'd never done brokerage before and, but I didn't want to go back to Australia. So I was like, why not?

21:47

Taylor Avakian

Like, I'll have a go at it. Were you, um, were you salaried or was it a hundred percent commission?

21:52

Adrian Berger

I started off salaried. That was my, uh, my deal with, with the, with the woman. I said that I would need to be sort of compensated for at least a year, preferably two.

22:04

Adrian Berger

Until I kind of figured out how to do it.

22:07

Taylor Avakian

Uh, what were you guys selling?

22:08

Adrian Berger

So she was selling residential condos. I was doing sort of retail condos, retail leasing, um, kind of anything to, you know, make a buck really.

22:18

Adrian Berger

Uh, so I did office leases. I did some residential leases, but the, my, my biggest focus was, uh, food and beverage tenant rep on the retail side. And I really started specializing in retail condos. So back to your comment about specialization, I, I was at a networking event and there was a big retail broker there and I started chatting to her and she was asking me what I was focusing on. I was like, oh, I'm focusing on this and I'm focusing on it. And she's like, I'm going to give you a piece of advice, pick something and focus on it. And I was like, okay. And so I went away and I was like, I like eating and drinking and there's plenty of places to do that in New York.

22:52

Adrian Berger

So that's what I'm going to do. So I, I just, I really focused on food and beverage retail. Uh, I didn't really have, you know, the brand or the company to get, uh, landlord listings at that time. So I just focused on, on, on the tenant side.

23:09

Taylor Avakian

You were hustling.

23:10

Adrian Berger

It was great. It was so fun.

23:12

Taylor Avakian

Man. Being young.

23:13

Adrian Berger

So hard. It was fun. I was like 30 and like living in the city, you know, I'm on foot every day. Doing the thing. Right. You know, it's like speakeasy opens and I'm like, I'm going to go there. And then you meet the owner and then you became friends with the owner. And then I ended up doing the second spot for them.

23:29

Taylor Avakian

No way. You know?

23:30

Adrian Berger

And then you find like a little coffee shop that's doing something. I don't know. It's like that, that, that, that, that business is out there. And New York's the kind of place where, you know, you can, you know, you can strike a match on the pavement and create fire. And you can do that every day.

23:44

Adrian Berger

Like if you wake up and you're like, I'm going to do something today, like you can do it in the city. Man. So it was pretty awesome experience.

23:50

Taylor Avakian

And then how did it bring you to Los Angeles with working with Michael?

23:54

Adrian Berger

Well, I met a, I met my now wife. We.

23:58

Taylor Avakian

In New York?

23:58

Adrian Berger

In New York. Yeah. She's from Arizona. And we met. And by that stage, I had left working for that broker, started my own firm. And she and I had a plan. We didn't want to settle in the city and didn't want to move to the suburbs. And we wanted to move to Santa Monica, actually. Wow. That's where she wanted to live, Santa Monica. And I said, great. I grew up on a beach. Like, I love LA. Yeah. Like, let's do it. And so we pretty quickly just upped and left. And we kind of left and came here with nothing. Like, we didn't have jobs. We didn't have, we found an apartment on a trip before we came out. You know, I leased my car over the phone, you know, we like landed at LAX with our bags.

24:38

Adrian Berger

We went straight to the Jeep dealership in Glendale and picked up a Grand Cherokee.

24:43

Adrian Berger

And drove to our apartment in Santa Monica. And we're like, hey, we're here. Like, what do we do? Yeah. You know? Yeah. So I think I realized that the brokerage business was something I'd fallen into as a way to keep me in the city.

24:56

Taylor Avakian

Mm -hmm.

24:57

Adrian Berger

And that now that we were starting again, and I, you know, I've started again a few times. You really do have to build up your network from scratch. And so I saw it as an opportunity to pivot. I said, you know, I don't know that I really want to be a broker. Um, and I really would love to sort of see what happens after the transaction closes. Like, that was always the thing for me in New York. Like, you're at the closing table. They're like, here's your check. And then they're walking away with the keys. And you're like, what are they going to do now?

25:23

Taylor Avakian

Mm -hmm. You know? And that kind of was, I was like curious, like what, what happens next? You know?

25:28

Adrian Berger

Ah. And so when I came to LA, I was very focused on trying to identify, you know, a developer, family office, an investor, someone who was, you know, out there doing deals and, and effectuating business plans. And, um, and I was fortunate that I met Michael through a mutual friend. And cause I had a few setbacks here. A lot of bigger companies didn't want to talk to me. Take a risk. Yeah. I'm like, I don't have an Ivy league background and didn't do a.

25:57

Taylor Avakian

Not from LA.

25:58

Adrian Berger

Internship for 50 hours at Goldman or whatever it is. Right. Um, I'm more of a entrepreneur or like a sort of a hustler, like business development guy. Um, and so I've learned over time that the way to get in front of the right people is through your network. And then you eventually find someone that looks across the table and says, I like what this person has to offer. And that fits what I do. And let's go. And so Michael was that guy. Um, but you know, he was taking a huge risk on me. Like I'd never done this work before.

26:34

Adrian Berger

I was taking a risk on him.

26:35

Taylor Avakian

Yeah, for sure. What was your like title? Like he brought you in and said.

26:39

Adrian Berger

I think I was like a VP acquisitions when I started.

26:41

Taylor Avakian

So your, your job was to go and dig up deals.

26:43

Adrian Berger

Find deals.

26:43

Taylor Avakian

It's like you do brokerage. It's kind of like similarly to acquisitions. You're going to go and find deals for me to go and buy and build. And was, was the idea in mind for them to do developments at that point in time?

26:55

Adrian Berger

So that was sort of at the tail end of a partnership that Michael had where he was buying and doing development. And there was still interest in doing that, but the market was changing such that the deal metrics just weren't really working for development. And that's sort of what predicated the idea of going out of LA and trying to find developers in other places where, you know, Michael could take his money and expertise and relationships and help other people grow development platforms. But at that time also, we were like very interested in doing high street retail, which really fitted my background.

27:28

Adrian Berger

Um, and we were, so those were kind of like the two main food groups was like development and, and retail.

27:36

Taylor Avakian

Um, so you're thrown into LA, right? Your job is to go find deals. What is, what do you do? What is your day to day look like? Like what are you picking up the phone? Are you researching stuff? Are you, uh, looking at sales comps? Like what, what is the process look like of someone who says you got to go find deals?

27:55

Adrian Berger

Yeah. So bringing it back to relationships and people, you know, the, one of the first things I did was I went to every networking event I could go to. So the biz now is the connects, the ULIs, the Jewish Federation, the, I mean, what the, the globe streets, like whatever was on.

28:15

Adrian Berger

Like I was, I was there. And, um, I would always study who the speakers were on, on the, on the panels. Mm -hmm. And I would go up to those people at the end of the panel who I thought were people that I would, I should know, uh, that were either like developers or owners or brokers or capital or debt, like equity, whatever it was. And just introduce myself and, you know, try to create a relationship. Yeah. Right. And so I did that a lot. Um, and that was one way where I started to build relationships. Uh, you know, Michael, one of the first sort of assignments he gave me was that he would buy any building on Wilshire Boulevard in Santa Monica. If he could buy for 500 bucks a foot. Yeah. So I thought, oh, that's, that's going to be easy. Right. We're just not.

29:09

Adrian Berger

Um, and I was living on ninth street between Wilshire and California. And so I literally walked up and down Wilshire Boulevard, I don't know, like five times. And I wrote down every building and made notes of things. And I saw every for lease or for sale sign. I called every single one of those brokers and introduced myself and talk to them and got the OM and toured whatever buildings I could tour. And I just started getting educated about that market because that was the assignment. Um, and so I really, once I did that on Wilshire, I did that on Santa Monica Boulevard. I did it in downtown. I did it, you know, in Broadway and the whole city basically.

29:52

Adrian Berger

Which was kind of very similar to what I did in New York. Like I, I definitely have walked more of New York than most New Yorkers.

30:00–40:00

30:00

Adrian Berger

You know, I, I, I've, I walked every block from 125th street down to the bottom of the island. Like I walked every one of those blocks. Like in my seven years there, I walked every block because I wanted to learn.

30:14

Taylor Avakian

You had to know.

30:15

Adrian Berger

It was my job. Right.

30:16

Adrian Berger

So I took the same approach and, um, and really started sort of just sort of making people aware of who I was and what I did for Michael. And everyone knew Michael, which was great. Cause like that was sort of gave me some credibility out of the gate. Uh, and then my other method is I have a very big belief that coffee shops are the, um, the, the, the forbearer of things to come.

30:43

Taylor Avakian

Oh, interesting.

30:44

Adrian Berger

And again, something I learned by being in New York. Cause I think that what Americans call the third wave coffee or we just call coffee.

30:51

Adrian Berger

But that was happening in New York where there was a sort of Australian style coffee shop where you make one coffee at a time, you know, it's all perfecting the coffee. And then you guys didn't take it to the next level. Right. And you really perfect it. Um, and they were starting to pop up in places and coffee with that coffee was expensive. And you'd go to these areas and you'd see like these buildings around you. So who's here. And then you see a coffee shop on the corner and you'd go in there and you'd see young people on Apple laptops and plugging away, drinking their $5 lattes. And you're like, what's going on in this neighborhood? You know, like, why are these people here? You're like, oh, this is cheaper than, but you're next to Park Slope, but it's cheaper. So I was like, interesting. This is really interesting.

31:33

Adrian Berger

And so it's that idea of being the next ring around an area that you can't get into.

31:39

Taylor Avakian

Got it.

31:40

Adrian Berger

So I, when I came to LA, uh, LA is a big city and I basically spent six months drinking coffee all over the city. I did. I like would look on, uh, um,

31:52

Taylor Avakian

Do you have a favorite?

31:53

Adrian Berger

Like Eater was like a big, like Eater was sort of coming into its own back then. And I read Eater LA and I read about like a coffee shop in Highland Park. I'm like, what's Highland Park? So I got in my car and drove the, you know, four hours from Santa Monica. Right. Um, and I sat at a coffee shop and I had a coffee and a pastry or a lunch and watched what was happening on the street. And then I would leave the shop and walk up and down the street and kind of just take in what was happening.

32:23

Taylor Avakian

Feel the vibes.

32:24

Adrian Berger

Yeah. Right. Because then it was like, okay, well, maybe this is a good place to buy a piece of land and build a building.

32:29

Taylor Avakian

You're following the hipsters.

32:30

Adrian Berger

Yeah. Right.

32:31

Taylor Avakian

Right. The ones who are starting the trend that they're, they're moving in to the areas that cost a little bit less, but they're, they're bringing in that youth. They want to bring other great parts of the more expensive areas to their area.

32:44

Adrian Berger

Yeah. And that look, they're all consumers. Right. And they want to consume the same stuff that everyone wants to consume. And so, you know, it was really like Williamsburg was kind of like one of the first places to do it where it started off with the artists. And then it was like a bar first and then it was like a cool restaurant. And then, and then all of a sudden it just, then it's the snowball effect. Yeah. Um, and then you look at what Williamsburg is today and it's like, so I, the same phenomena happens in all kinds of big cities. So that, that was sort of how I, I figured it out. And then, you know, to come full circle on Santa Monica, you know, during COVID we ended up buying, I did, I think 17 land deals, you know, um, between 2020 and 2023 in Santa Monica.

33:26

Adrian Berger

And it was all because of that work that I had done, you know, seven years earlier, all those brokers that I connected with that at first were like, who, who's, who is this? Who you were, I knew exactly what listings they had that didn't sell and what properties they were. And I had the OMS from, so I knew what they listed them for years before. And I kept a record of everything and I called them first and said, Hey, we've got capital. We want to buy land. It's tough for COVID. We can help these sellers, you know, that, that where they're not getting paid rent right now. And, um, that was how I did most of those deals.

34:03

Taylor Avakian

Do you get a sense of, if you've been at it long enough where you know, almost immediately, like back of the napkin, okay, this is going to work because you had so much experience in the areas. You pretty much knew, okay, if we could get this site at this price, like it's going to work.

34:19

Adrian Berger

Yeah. We definitely worked to get to that. I think prior to that run, things were a little bit more ad hoc. But I think when we, uh, we formed like a, a partnership with a capital group that gave us a bucket of money for the strategy. So internally, we basically came up with a, a method of speeding up our underwriting, making it more consistent, making it more efficient, making it have less mistakes. We had all kinds of LOI templates ready to go.

34:51

Taylor Avakian

Mm -hmm. Because as you know, you know, it's speed counts, right?

34:55

Adrian Berger

So especially if it's off market and, you know, you just never know what could happen.

34:58

Adrian Berger

So we really built this kind of, um, program, I suppose, or process. Process. Yeah. Where we could, a site would come in, we'd back in an applicant, we, we put it in a model, we get it quickly masked by an architect. And then we knew exactly what it would be and what the max we could play. And then I would just go and try to make a deal.

35:25

Taylor Avakian

Done. How many of those deals were on market versus off market?

35:32

Adrian Berger

Um, there were, I'd say maybe five were on market. Okay. Four or five and the rest were off market.

35:42

Taylor Avakian

So that goes towards your relationships, right?

35:44

Adrian Berger

And what happened also was, um, we were transacting and we had a great reputation for, um, performing under contract, which is, you know, you're a broker. It's really important.

35:54

Taylor Avakian

Very much important.

35:55

Adrian Berger

Sometimes you're not the highest offer, but you're the best buyer. And so you win the deal. Um, and we, I had, what was really good about it was the brokers were starting to call me proactively and saying, Hey, this owner would sell and we're going to give you the first shot. If you could hit this number, it's your deal. Interesting. And then we got a bunch of those. Um, and then I also tried to work with as many brokers as I could because that way, you know, if I do five deals with you, I know you're going to send me deals.

36:22

Adrian Berger

But then Joe, Joe Schmo is not sending me deals. Yeah. But if I do, you know, two with you and one with Joe and one with Stacy, then all of a sudden, and like, they all have a good experience.

36:32

Adrian Berger

Then, then they're all going to be calling me and saying, Hey, here, here's the next one. Here's the next one. And like, that's really how you really can get your man.

36:39

Taylor Avakian

You're making your one acquisition into all the brokers working on your behalf, trying to find acquisitions and deals for you.

36:46

Adrian Berger

Right. And, and like, and the, and the reason why they're coming to you is because you just performed with them. And so they can go to their owner and say, I just did a deal with this group. Ah. And so like, you know, that feeds on it. Yeah. Yeah. For sure.

36:57

Taylor Avakian

A hundred percent.

36:57

Adrian Berger

And a lot of it's like, like a lot of it's relationships. Um, a lot of it's like just being, you know, um, moral and honest and ethical in business and just doing what you say you're going to do. Yeah.

37:09

Taylor Avakian

How do you, um, how do you maintain relationships? Cause it's one thing to meet someone and have a really good experience that first time.

37:16

Taylor Avakian

I like this guy. And there's another thing to stay in touch with them enough to where they remember you because we're interacting with so many people all the time. Okay. I want to buy this. That, uh, great. I put it in my, you know, put it in my notes, put it in the back of my head. Okay. Adrian wants to buy this kind of thing, but then I got to call, you know, 45 other people. And maybe I forget about exactly what you're doing. How do you maintain relationships?

37:42

Adrian Berger

Yeah. I think it's impossible to maintain them all effectively the same way. And you just, and things end up falling in, in buckets and categories. And then you also spend more time with certain people and others. And so those naturally evolve into deeper relationships. But, um, it's the same thing as what I did when I came to Santa Monica. It's like, it's the curiosity of wanting to understand every deal and what happened with it. Right. And you see, um, you put out a listing and I, I, I reply to you and say, Hey, how you been?

38:16

Taylor Avakian

What's the story with this one? Or I just call you and say, Hey, I saw you listed something like, what, like, can you just give me the story? Yeah.

38:21

Adrian Berger

Um, and then it's an opportunity because you're going to get information, right? And then you're then going to give information, which is, Hey, we're working on trying to find this right now.

38:33

Taylor Avakian

Do you have anything else?

38:35

Adrian Berger

So it's kind of using the brokers. Yeah. For a broker example, seeing that email come in and being like, Oh, I should call that guy. I always like talking to that person. It's been a while. Um, I had a conversation with someone yesterday who I haven't spoken to in probably two or three years, but, uh, we remembered each other loosely. And, and so you're getting on the phone and it's warm.

38:59

Adrian Berger

And what helps also is what helped me is, you know, Michael has created an amazing business. He has an excellent reputation and that counts. And so, you know, when you're talking to people, they, they know that they're talking to someone who's not BSing. They're talking to someone that if we decide to go for something like that means we want to try to do it. And we have a high probability of, of, of transacting. So they're interested in getting on the phone with me also. And I've always just been very open about sharing information too, you know? And so people then seek you out, right? That's, and that's a way of keeping the relationship. So, you know, some brokers will call me and like, what are you seeing on the hard cost front? Or what are you seeing? How, how would you assess this?

39:44

Taylor Avakian

Yeah. I'm talking to an owner, Adrian, like, how would you assess this? What information do you think is the most valuable, um, for you guys?

39:56

Adrian Berger

That's a really good question.

39:57

Taylor Avakian

Like what, what is that

40:00–50:00

40:00

Taylor Avakian

piece of knowledge that is, is going to give you the biggest alpha in terms of knowing that where other people might not know that besides specifically the deal itself?

40:13

Adrian Berger

Yeah. I think, and it's very relevant to today. I think, you know, understanding who the seller is and their situation, I think is one of the most important things.

40:22

Taylor Avakian

Can you, can you explain what do you mean?

40:24

Adrian Berger

Yeah. So we're working on a deal right now. I think hopefully we're, we're going non -contingent today, but it was an opportunity that, um, that was on the market that, uh, was at a very high price that we wanted to do the, to do a deal. But it was just like, we're too far apart. We didn't even make an, like, we didn't even make an. How far off, uh, and again, if this doesn't happen, this is going to come out in a couple of weeks so we can, we can take it out.

40:53

Taylor Avakian

But how far off from the initial asking to where you guys were underwriting?

40:57

Adrian Berger

Uh, was the first time around we were half.

41:00

Taylor Avakian

Half of what they were asking. Okay.

41:02

Adrian Berger

But by the time we actually came up with some other creative ways of thinking about it, we ended up getting to about, uh, uh, what's the math on that? Like we were like two thirds of where they were or three quarters of where they were. 75 ish percent. So 25 % below where they were.

41:20

Taylor Avakian

Can I ask what you did creatively to be able to make that up?

41:24

Adrian Berger

So it was a unique situation cause it's a covered land play with, um, an existing tenant.

41:31

Taylor Avakian

Like a retail?

41:32

Adrian Berger

Uh, yeah, it's an office tenant. Okay. And we're trying to get an entitlement, um.

41:38

Taylor Avakian

For multifamily.

41:39

Adrian Berger

For, uh, yeah, for multi. And, and then basically there was a, the, the entitlement path was like not exactly clear. So that created a little element of risk. And so we had to think about, well, what happened if we don't do that? Um, what's our fallback position. And I think that our initial analysis of the fallback position was, um, was low because I think we didn't feel like we necessarily had the knowledge of that use. And so then I went out and found someone that I knew had that knowledge. Again, relationships. Yep. Actually one of the first people I met in LA who I stayed in touch with over time. Wow. And I rang him and said like, how would you look at this? And then, uh, I even said to him, Hey, like maybe there's a something, maybe there's a role for you in this opportunity.

42:28

Adrian Berger

Right. It's always credibly like we'll give up a little piece if it means we can do a bigger transaction. Right.

42:35

Taylor Avakian

Like what do you think the biggest mistake people make in the acquisition phase or what's the biggest thing that is overlooked?

42:45

Adrian Berger

Oh, that's such an open -ended question.

42:46

Taylor Avakian

Um, and what I mean by that is in that situation, right?

42:50

Taylor Avakian

If you were a normal investment company or the average investment company, you would have been at your 50 % and you would have said, this is what we're doing. Like, you know, this is where we're coming up with, with my knowledge. I think this is what makes sense. But you were like, no, like, okay, let's, let's, we were like the land. We like the opportunity. Let's see what we can do here. And so you went out and creatively tried to figure out if there's something else that you need to know to have that A, B and C and D plan and whatever it is. So what do you think it is that, uh, people don't do enough of, or what's a mistake that stops people from actually getting deals done?

43:25

Adrian Berger

Yeah. I think, you know, going out and trying to get the answer that you need, um, persistently, uh, until you, till you get it and you're satisfied. There was something about the deal that I was like, we're missing something. There's like, this, this, this is an, there's an opportunity here. And so we, we kept, I kept like picking at it and moving on to something else. And then I kept being like, I kept driving by it and being like, there's something, there's something that's not, there's something I'm missing. And then I go to my colleague and I, and who's really smart. I'd be like, what, like, what are we missing? Well, how, how can we, how can we get Michael comfortable?

44:03

Taylor Avakian

How can we get capital comfortable? What would we need to do?

44:05

Adrian Berger

And so we just kept brainstorming it. And I was like, oh, let's call our land use council and ask them some like really specific questions on this. And you know, you got to spend money, but like, let's do it. And we came away and we're like, oh, actually, you know, this is different to what we thought, you know? So seeking the knowledge and going out and, and, you know, if you really believe in it, um, but coming back to the seller, you know, part of it, which I said earlier, you know, this seller situation was a patriarch had passed away and there was multiple beneficiaries and they, or they just, they just want, they want, they want to, they want to get their money and they want to move on with their lives. Like most people who are second, third generation, they're not in the real estate business.

44:47

Adrian Berger

And they're not interested in being in the real estate business, especially if it's one asset. They just want their percentage to go in and do whatever they want, you know, buy a car, invest in something else and go on a holiday, whatever. Right. So knowing that, you know, then you can start to position your pitch to the, to the broker on why your offer actually aligns with the interests of the seller. And right. So it's about solving your, like everyone has problems they're trying to solve. Right. And so you're trying to solve their problems. Sometimes you can't like, I want the fastest possible deal at these, this crazy price. And we're just like, look, we can give you that crazy price, but you're going to give us time. We're never going to give time. Okay. Then we can pay this price. Oh, that's too low. All right. Well, yeah.

45:30

Adrian Berger

All right. So call us in six months when, you know, you realize that the market's getting worse. And so that's, that's a, that's sort of a really important element of like, just really try and coming back to being curious about the people. Who is this person selling?

45:47

Taylor Avakian

Why are they selling today?

45:48

Adrian Berger

It's the worst market in 15 years to sell something. Why are you selling today?

45:53

Adrian Berger

So don't sell.

45:54

Adrian Berger

You're going to get a good price from anybody. Interesting. You know? And so then from there you can sort of like try to unpack what's really going on. And then you can then try to use your negotiation skills to like, you know, you're trying to convince someone to see the world the way you're seeing it.

46:14

Adrian Berger

Or you can try to find some middle ground. I will give on this, but we really, really need this, you know? And, and, and then if you've got a good broker on brokers are great. Like people complain about brokers. I think brokers are super important because.

46:28

Taylor Avakian

Tell me more.

46:28

Adrian Berger

Oftentimes you're dealing directly with a seller and it's, it's, it's, you're, it's, you're too close. They're too emotional. They're too attached to a property or to a thing. There's no, there's no person in between that's like talking sense to both sides. Yeah. Calling me and saying, Adrian, like, I know that call was really sucked. And that, and the seller was like really irate, but like, listen, don't even worry about it. Like this is what we should focus on. And they're the person giving you the guidance, giving the seller the guidance. They're the guide, right? Like brokers are the guide. A hundred percent.

47:03

Taylor Avakian

Cause we know too, from being almost in a position where you are, where you're understanding the seller, you understand what they care about the most, right? Is it the speed? Is it the terms? Is it that, you know, this, this was their parents built it and there's this emotional tie. And so they need to have that comfort of understanding that this is going to be, this is the next step in, in their parents' legacy, whatever it is, understanding what the actual feeling is, the emotions. And we always, uh, it's kind of a joke that commercial is less emotional than residential. And that may be true to some extent, but I also think that it's more emotional than people give it credit for. And especially the sellers in today's market specifically, like there's no logical reason to want to sell unless you have to in today's market.

47:52

Taylor Avakian

Cause like you said, it's not the best market that it's been, but there's other reasons. There's other factors that are not just the highest price that you can get for an asset that is going to dictate someone's motivation. And so understanding what is important to that person is extremely, extremely valuable because there's so many pieces that you can move. Like you said that you give up a little bit here, you take a little bit here. It's, it's, it's this symphony of making a deal happen, which I think is an art that a lot of people, if you're not doing it, if you've never done something like that, it's hard to understand. You're like, Oh, okay. You pay this cost as much. It's like, no, that is not the way that real estate works. It's much more nuanced from that perspective.

48:33

Taylor Avakian

So it's interesting that you take that approach of, of trying to put yourself in the, in the seller's shoes too, which I'm, I'm curious to know what was the best deal that you've done that just like brought a smile to your face?

48:46

Adrian Berger

Well, there's been so many, but I think, um, I always celebrate every deal cause there's so hard to do and they're getting harder to do. Um, and so you've got to celebrate the wins, right? You've, you've got to like take the time to do something like, I feel like you've got to go to a dinner or go to a drinks or buy yourself. I mean, something like I'm not a materialistic person, but you know, if you like Japanese whiskey, enjoy the win by the Japanese whiskey, right?

49:13

Taylor Avakian

Some Hibiki man.

49:14

Adrian Berger

Yeah, exactly. Or you want to go to a Lakers game? Go to the Lakers game.

49:18

Taylor Avakian

Next time we close a deal, we'll get some Yamazaki 18.

49:20

Adrian Berger

I like that. So I'll, I'll, I'll tell two stories. Anyways, the, the first deal I did in LA, I think probably is still one of my favorites because I think it, I think it's a good, it's a good story about the deal, but it's also a good story about like understanding and acquisitions methodology and mindset. So, you know, we, we, we had, um, Michael had a site with his partner in Koreatown. It was fully, um, entitled and it was RTI and we were out, they were out raising LP equity. And I had met a commercial banker at an event or was connected to him by a friend. I don't even know how I met him. And

50:00–1:00:00

50:00

Adrian Berger

I went to his office in El Segundo and we're chatting and I'm asking him about the bank and you know, who they're like, do they have clients that are interested in certain things? And he's like, I've got one client, he's a Chinese developer. He really wants to buy something entitled. And I said, oh, that's interesting. And you know, I'd certainly spent a lot of time in Asia and I'd spent a lot of time in New York after the financial crisis, fielding calls like this from groups that weren't real and understanding how to really vet how real somebody is. Right. So I said, you know, how much of their money do you have in your bank? And he's like 20 million bucks. I'm like, great.

50:37

Taylor Avakian

How many deals have they done in LA?

50:38

Adrian Berger

They've done five. Like, oh, so this is a legitimate foreign buyer. Right. So, and they had a local representative and they had local people. And I was like, okay. So I left the meeting. I called Michael straight away and said, hey, what would you sell?

50:53

Taylor Avakian

Would you sell anything?

50:54

Adrian Berger

He's like, I've got this 180 unit site entitled in San Diego, in Koreatown. And I said, what crazy number would you sell it for? He was like, I'd sell it for 40 million bucks. All right. Just like 35,000 square feet of land. Like, yeah. Insane.

51:12

Adrian Berger

So I rang up this banker. I said, look, we have a deal. We have a property we will sell. But like this, it's like, we're about to get capital and we want to build it. We're going to make a bunch of fees and it's going to be a fat deal and all the things, you know, to make them think that we're not really a seller.

51:30

Adrian Berger

Yeah. And, uh, he said, okay, send an NDA. Okay. What harm is there?

51:38

Adrian Berger

So anyway, long story short, we, we managed to get this group engaged and they made a, an opening offer, which was really good. Like the opening offer that they made was almost the equivalent of the money that the department, the sponsors would make in the deal, how they built it, stabilize it and sold it. Right. So we're already starting at a place of winning.

52:04

Adrian Berger

And so we just tried to see how, like, how good of a deal we could get. And we just kept going back and forth and back and forth. And we got them up to, you know, a number that was like in the, in the thirties and we got them to, you know, put down a deposit, large non -refundable pass through deposit, which also never happened.

52:26

Adrian Berger

Um, yeah, their chairman flew out and came and sat in our conference room and we had a translator and like, we, we did a deal. A thousand bucks a foot for, it wasn't quite a thousand. It was kind of more like 900 and something dollars a foot.

52:37

Taylor Avakian

But that's insane.

52:39

Taylor Avakian

Because right now, again, you can't even give land away for free. And that, that's, oh my gosh.

52:44

Adrian Berger

And so you got. It was 2015, 16. So it was, you know, it was like at the height of, it was the height of that period where there was a lot of foreign money, not just from China, but from like all over the world, going into America and pouring into LA. And, um, you know, we, but it, the, the, the, it was a challenging deal. Cause we, we get agreed on a deal and then there was like, they, like they disappeared for months. Like I was trying to get an answer on certain things. And then we're being told, I'm being told, Hey, like I have, I have the check in my hand to pull the permit and we have equity that we want to do a deal with. And I'm like, just wait, this is going to happen. Right.

53:25

Adrian Berger

And so somehow we got, I got them back in touch with them and the momentum happened again. And then, and then we got, we got into contract or what kind of remember exactly. Um, and then 11 months later they closed. Wow. Um, there was a moment where they came to us needing more time and we said, sure, we'll give you more time. And, uh, you know, you know, and they literally in the office pulled out a checkbook and wrote another check. Oh my gosh. So we were like, okay, they really want to close. I'll take that. So that was great. Cause that was the first one. And, you know, in a new relationship with Michael, it was, it was great to have a win and for him to kind of, for him to sort of, for us to have a conversation of like, this

54:07

Adrian Berger

is, this is where, what we can do together.

54:09

Taylor Avakian

Yeah. You know?

54:10

Adrian Berger

And so that, that felt great. Um, and then the other, another deal that's really, I think worth talking about was one in Santa Monica, which was a small, small land deal dollar wise, but highly complicated and took three years to, took me a year to get an LOI signed.

54:27

Taylor Avakian

Um, because the seller.

54:29

Adrian Berger

Because of the situation with the seller, you know, siblings not, not talking. There was a site, pretty bad site issue. They didn't really have a broker. Um, they, they had legal representation, but they weren't real estate attorneys. So you had this confluence of characters and situations and, you know, and there was a motivation by one party on the seller side, but not the other. So like, I'm there trying to like, you know, push an elephant with a, you know, with a, not even a broomstick. It was more like with a, with a, with a string, with a floppy, uh, with a, with a floppy leaf branch, you know, and the elephant's like, what's that on my butt? Right.

55:14

Taylor Avakian

What's going on?

55:15

Adrian Berger

Cause I really wanted to do the deal. Cause it really helped me own the property next door.

55:19

Taylor Avakian

Can I ask, did you call them directly? Was it like, Hey, we want to, how did you get the site?

55:24

Adrian Berger

So we, we had bought the neighboring site, but we had chased, there were three properties on this block and we had chased them all in various ways. And the key of the whole block was the middle piece. Um, and the group that we bought the corner from had tried and not been successful. Ah. And so they were like, okay, we're just gonna, we'll sell you this corner one. And the corner was big enough to do a project, but I was like, no, I want, I want the whole block.

55:52

Taylor Avakian

Give me the lock.

55:53

Adrian Berger

I want the block. So I was like, let me, let's unpack this. So I called the broker that had worked on it and he was like, I'm not working on this. And I was like, come on. Like, he's like, I don't want to be dragged back into this. There's the years of my time. I'm never going to see again. I don't know. I'm like, listen, I think we can make something happen here.

56:12

Taylor Avakian

Yeah. So I, will you think about it?

56:15

Adrian Berger

He's like, okay, I'll think about it. And so he eventually agreed to work on it.

56:20

Taylor Avakian

Mm -hmm.

56:21

Adrian Berger

And, um, we ended up having one of our attorneys get really involved in negotiating with one of their attorneys because they refuse to communicate with us directly or with this broker directly. Oh, geez. So it was a very difficult transaction. Um, the long and the short of it was, it took three years from like the first time we wrote an LOI to closing. And, um, I rang the broker. I said, I told you we would do it. Right.

56:49

Taylor Avakian

And he's like three more years of my life.

56:50

Adrian Berger

He, but, but he got, he got paid. Yeah. We paid part of his commission because the sellers were messing him around. And I always said to him, I'd take care of him. Yeah. Cause I think it's really important to do that with brokers. 100%. Cause I think brokers get stiffed a lot. I got, I got, I got stiffed in New York a bunch and attempted to be stiffed. And I was like, it's the worst. It's the worst. Right. Yeah.

57:10

Taylor Avakian

It's so short term minded. So, but then talking about celebrations, like he rang me and said, what should we do? Should we go for dinner?

57:15

Adrian Berger

I'm like, yeah, we can do a dinner. But I said, we got to do something better than that.

57:19

Adrian Berger

I was like, let's go to the Porsche experience in Carson.

57:22

Adrian Berger

So we did. We went down there and we drove Porsches for 90 minutes and it was unbelievable.

57:27

Taylor Avakian

Oh my gosh.

57:28

Adrian Berger

And then we went for dinner that night with a bigger team.

57:31

Adrian Berger

Um, so like that, that puts a smile on my face because it was one of the hardest deals that I did. Um, and, and like now that broker and I have become like really good friends. Yeah. Cause like literally we're World War II in the trenches. It's so about that. We were in one of the trenches and just, uh, you know, we've, we've seen the whites in each other's eyes, you know, like.

57:50

Taylor Avakian

Shared experience. It's a shared experience, right?

57:52

Adrian Berger

And that's how you build relationships.

57:53

Taylor Avakian

Let me ask you, um, what do you think makes a really, really good broker? And then what do you think makes a really, really good principle in terms of either the skill sets or the habits or like, what is it about high performing real estate people, uh, from both sides? Cause you've done both. So what do you think makes each of those individuals special and unique?

58:18

Adrian Berger

Yeah. I think from a broker standpoint, I think, um, brokers that really collect information and knowledge to, to be, to be helpful, I think is really important. Um, and on the development side, like on the land development side, which is really complicated and even developers have to go and hire land use attorneys to figure stuff out. Like you can tell pretty quickly if a broker is trying to convince you that they know about this land use better than you do. And you're kind of like, Hey, like, you know, it's okay if you don't know, just like.

58:55

Taylor Avakian

Don't try to convince me that.

58:56

Adrian Berger

I mean, it's like, what you're telling me is doesn't, is wrong. Yeah. You know? So like, that just makes you in your mind be like, I don't really necessarily trust this person as much. Right. And so trust is so important, you know, like whether you transact or not, like just in the, in the world, you want to be able to feel like you can have an honest conversation and not kind of be given the runaround. Cause at the end of the day, like none of us make money if we don't do deals, like, you know, brokers, principals, employees, like we don't get money if we don't make deals. Um, and I think knowing what you don't know, you know, and just being honest about that, I think goes a long way to enhancing credibility and trust.

59:37

Adrian Berger

And I think the, the, the good brokers out there, they, they, they know how to ride the rollercoaster of ups and downs of a deal and the emotions of both parties and stay very level headed and come to the table with, with solutions, um, and man, and manage both sides. Because ultimately like a lot of brokers have a really good sense of where the deal is going to get made

1:00:00–1:10:00

1:00:00

Adrian Berger

and they do a really, really good job of making either side feel like they're not getting kind of a bad deal. I think that's an, I think that's an art form.

1:00:10

Adrian Berger

You know, and I think that having a lot of data points to back, just back up, you know, is, is, is that's, I think for a broker, um, on the principle, the principle side, like I think reputation is everything, you know, like it takes, what's that, there's a famous phrase. It takes a career to build a reputation and one thing to pull it down. Yeah. So, um, you know, we've always tried to be a group that is, is fair dealing. We take an approach of doing more work upfront so that when we make an offer, there's less chance of us having to like do the, play the retrade game. Um, you know, we've, I don't think we've ever gone non -contingent and not performed.

1:00:59

Taylor Avakian

That's very impressive.

1:01:00

Adrian Berger

I don't think we've ever really retraded for sport.

1:01:07

Adrian Berger

Um, I think we've, we've had to retrade on like bad things. Material facts. But like, not just because.

1:01:13

Taylor Avakian

You want to, you want to get a little less of a, yeah.

1:01:16

Adrian Berger

Yeah. Or like making an offer and then in due diligence being like, oh yeah, we didn't underwrite it properly. And yeah. So we try to be a little bit different. So I, I mean, I don't know.

1:01:25

Taylor Avakian

I think, I think, um, it's a combination of skills.

1:01:28

Adrian Berger

I think also being a straight shooter, like, I mean, again, like everyone's, I hate the word busy. Everyone's busy. We're all trying to do stuff. Like everyone's, the world's more frenetic and frantic than it's ever been before. So like, just like, don't waste my time. I don't want to waste your time. Like, just tell it to me straight. This is where I'm at. I'm a, do I, am I anywhere? Do I have any shot?

1:01:50

Adrian Berger

No. Yeah. Great. If that changes, call me and I'll re -engage.

1:01:53

Taylor Avakian

Yeah. Thank you. You know?

1:01:54

Adrian Berger

I appreciate you. So I'm brokers always saying like a quick no is better than a slow maybe.

1:02:00

Taylor Avakian

A hundred percent. A hundred percent. What, so then. What do you think makes a good broker?

1:02:06

Taylor Avakian

Great question. What makes a good broker? There's, I think it's, there's multitude of facts, things because part of a broker's job is to one, find the deal. And actually I would say a majority of a broker's job is finding opportunities because it's so competitive. If you don't have the opportunity, then nothing happens from there. Mm -hmm. What the other half of that equation is the human element, which is the negotiations and understanding emotions and being able to make a deal happen. You're like a, you're a magician when it comes to managing a bunch of different things at

1:02:41

Taylor Avakian

To make something actually, it's like being a chef.

1:02:45

Taylor Avakian

You use a bunch of different ingredients, right? And there's not a recipe.

1:02:49

Taylor Avakian

But you've, you've take a little bit experience here. Okay. Salt would be good here.

1:02:53

Taylor Avakian

A little bit of spice would add, you know, something to this flavor. Like you take all of your experiences and, and put them together to create and make this, this incredible dish, this thing happen.

1:03:02

Taylor Avakian

But you have to know what those ingredients are.

1:03:05

Taylor Avakian

And you have to be able to know, okay, if I, if I, this is what this person cares about, or if I add a little bit here, like, so I think it's, it's one finding the deal.

1:03:16

Taylor Avakian

And then two, building the relationships and knowing, having the knowledge to actually make the deal happen. Negotiation skills are huge.

1:03:22

Taylor Avakian

Which I wanted to ask you, like, I'm constantly trying to improve skills from communication, from learning, from question asking, from psychology. What do you do to continuously educate yourself to be better at what you do?

1:03:36

Adrian Berger

I, uh, we talked about this before we started recording, but I mean, I think listening to other professionals who are doing things, um, like just the knowledge absorption, podcasts, you know, listening to people, um, in our industry that have been really successful and just hearing them talk. I mean, they might not have to talk about a deal, but you know, some panels, they talk about deals and the most difficult deals and how they did them and strategies. And I think that's super important. Mm -hmm. And I think reading like you, you know, um, and it's not just reading, you know, nonfiction, like sometimes you read fiction, you know, you read Stephen King and like in his books, he's talking about situations where he, this, his character is negotiating. Yeah. And you're like, oh, interesting. That's so funny how in that situation he's used this methodology or, and it's also like,

1:04:31

Adrian Berger

you learn language that way. Like I, um, I've always enjoyed reading. Um, I'm actually reading a Stephen King book right now. So it was, and then you, and you, then you take sentence structures or ideas. And so that all comes from proactively going out and seeking more knowledge from others.

1:04:51

Taylor Avakian

Um, and, and absorbing it.

1:04:53

Adrian Berger

And absorbing it. And like, but it, and there's no, like, there's no tricks to negotiation. I don't think, I think it's everybody, it's, it's using your chef analogy. It's the same thing. Like everyone's an individual. We all have different communication skills and styles. And there are certain elements of negotiating for sure. But, but then you kind of have your own way about it. Some people are, uh, bullies. Uh, some people are soft. Sometimes you can use all of those in a negotiation.

1:05:22

Adrian Berger

And then it's about trying to know what to pull when, um, you know, the hardest thing is to, to know is when to pull the, this is our best and final.

1:05:32

Adrian Berger

That's the hardest one.

1:05:34

Adrian Berger

I think because you are staking your position.

1:05:38

Adrian Berger

Yeah. And oftentimes when you do that, like a deal happens or you win, but, but sometimes, or you, or sometimes you're like full flow.

1:05:50

Taylor Avakian

What, um, before we kind of wrap up, what have you learned from Michael? What, what being around him as someone who's highly successful and built an incredible company, like what have you taken away from him?

1:06:02

Adrian Berger

I think, uh, the reputation thing is obviously something I always believed in, but seeing it firsthand, uh, and for so long, um, you know, is just really hammers at home, especially in our industry. Every, it's such a small business, you know, even as so many people in the business, it's such a small business, like community, people know each other, people talk, people love talking in this business. People love gossiping in this business. Um, so that's really critical. Uh, you know, Michael's philosophy and our company culture is like, do deals and have fun. You know, like that's, and that's something that resonates with me and something that I think is important because life is more than just work and you got to have fun doing it. Um, and doing deals is fun. So that all kind of flows together.

1:06:50

Adrian Berger

But I think the biggest thing I've learned is just the, the financial sort of engineering elements of, of our business and how, you know, we, we were hanging out the other day and he's coming up with a new idea for our low income housing tax credit, um, business. And it's, and how did he come up with that? Because what I just said, he, we have constantly having conversations with capital and with developers and operators and consultants. And we're, we're like always pushing ideas around and testing things. And then, well, one day he will wake up and be like, oh, those things coalesce into an idea.

1:07:30

Taylor Avakian

And can we go and make that idea happen?

1:07:33

Adrian Berger

And, and having the, having the courage to just go for that, which is what we've always been. Like we've always been like, oh, this doesn't work. Like that's an interesting business. Self storage. Let's figure that out. Right.

1:07:45

Adrian Berger

And now that's one of our biggest focuses. Wow. So I think, you know, having that flexibility and then understanding like how to creatively structure things has been a real benefit because now if I go and try and do a land transaction, I know there's three or four structures that I can use to, depending upon the seller or the owner's situation to be in a place to make a deal versus having them be like, we're not a seller. Right. Or would you do a land JV?

1:08:21

Taylor Avakian

Would you contribute this? Would you do that? Like what's your, what's going on here?

1:08:25

Adrian Berger

And then understanding within that, like how then to go and, and sell parts of that to capital. And so that, like, that's been the biggest learning from, from, from Michael.

1:08:35

Taylor Avakian

That creativity is so important because there are so many strings, like you said, that you can pull that can make a deal work or make it not work.

1:08:43

Taylor Avakian

So Adrian, thank you very much for.

1:08:45

Adrian Berger

Thanks for having me. I really enjoyed it. Yeah. Great to see you. Yeah.

1:08:48

Taylor Avakian

If anyone wants to go check it out, Cypress Equities.

1:08:52

Adrian Berger

CypressEquity.com. Okay. Um, and yeah, happy to answer any questions people have.

1:08:59

Adrian Berger

Thank you, man. Thanks for your time. I appreciate it. Thank you.