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<\/a>Bob Hart, Founder, CEO and President of TruAmerica Multifamily<\/p><\/div>\n
Recalling his first real estate investment, a small multifamily property he bought in 1986, Bob Hart quipped, \u201cWhat started out as a duplex has turned into running a company.\u201d<\/p>\n
TruAmerica Multifamily\u2019s CEO knows something about how to build a major enterprise quickly from a modest beginning. In less than four years, Los Angeles-based TruAmerica has established itself as one of the fastest-growing private real estate companies in the U.S.<\/p>\n
Since founding the company in July 2013, Hart has authorized the acquisition of nearly $4 billion in assets. Today, TruAmerica owns outright or manages $6.7 billion in assets, representing 32,298 apartment units. Over that stretch, it has grown from one to 41 people, operating offices in Seattle; Denver; Arlington, Va.; Woodland Hills, Calif.; and Orange County, Calif.<\/p>\n
\u201cWhat Bob does very well is he navigates the vagaries of cycles and he identifies opportunities at various points in the cycle,\u201d said Robert O\u2019Rourke, senior managing director and head of real estate investments of Guardian Life Insurance Co. of America, which owns an 80 percent stake in TruAmerica. \u201cHe reacts to the opportunities that are created by economic activity throughout the cycle.\u201d<\/p>\n
When the two companies joined forces, Hart was president & CEO of Kennedy Wilson Multifamily Management Group, a Los Angeles-based affiliate of Kennedy Wilson Holdings where he served in those roles from 2000 to 2013. Hart was part of the executive team that took the parent company public in 2009.<\/p>\n
His own team at Kennedy Wilson Multifamily completed $3.5 billion worth of transactions in the U.S. and Japan, notwithstanding the Great Recession. It was a remarkable run, yet Hart realized that it was time to strike out on his own. \u201cI was an officer of the overall company,\u201d he explained, \u201cand I wanted something where I could have direct ownership.\u201d<\/p>\n
TruAmerica\u2019s origins stem from years of collaboration between Guardian Life and Hart during his tenure at Kennedy Wilson. When Guardian Life decided to add a real estate investment platform, Hart was the obvious choice to lead it. That alignment \u201cgave me the impetus, along with my own initiative, to launch the venture when I did,\u201d Hart recalled.<\/p>\n
EARLY TO RISE<\/strong><\/p>\n Becoming a real estate magnate wasn\u2019t always Hart\u2019s plan, however. \u201cSometimes you don\u2019t choose,\u201d he observed. \u201cSometimes things happen by serendipity.\u201d<\/p>\n After graduatiing with a civil engineering degree in 1979 from Worcester Polytechnic Institute in Worcester, Mass., he migrated to L.A., earning an M.B.A. in management from the University of California at Los Angeles. He landed at The Walt Disney Co., serving as director of business development for the Disney Channel. Seeking ancillary income, he started buying residential properties in the L.A. metro area. By the early 1990s, Hart was also handling land entitlement and large-scale home renovations.<\/p>\n \u201cFor the first 10 years \u2026 I was an investor in real estate as a side venture,\u201d he noted. \u201cI really learned the business starting in 1993 with my first institutional position.\u201d<\/p>\n When the junk bond market collapsed in 1991, so did L.A.-based Executive Life Insurance Co. Once California\u2019s largest life insurance provider, Executive Life was forced by the state to sell off its $3.3 billion portfolio of high-risk, high-yield investments. Appointed custodian of a newly formed trust, Hart undertook the rehabilitation and disposition of $1 billion worth of the failed company\u2019s real estate assets and securities between 1993 and 1995.<\/p>\n It was in this shaky environment that Hart learned the ropes of real estate finance. Tasked with executing a major workout, he restructured joint ventures for Executive Life affiliates that were reducing their equity exposure or closing down.<\/p>\n Following Executive Life, Hart joined Heitman Capital Management as senior vice president of portfolio management. In that role, he oversaw the asset management and disposition of a $500 million portfolio on behalf of pension funds, endowments and domestic and foreign lenders.<\/p>\n Hart, too, credits much of his knowledge to the experience of navigating turbulent times and working amid constraints. \u201cIt\u2019s one thing to run a real estate property, project or company when things are on the upcycle,\u201d he noted. \u201cIt\u2019s another thing to master a downcycle.\u201d These early ventures equipped Hart with a career-shaping maxim: \u201cYou have to know how to either raise money or have the money yourself.\u201d<\/p>\n TruAmerica\u2019s first acquisition was Piazza D\u2019Oro, a 221-unit apartment community in Oceanside, Calif. Image courtesy of FPI Management<\/p><\/div>\n For TruAmerica\u2019s inaugural purchase, Hart did both. In November 2013, TruAmerica bought Piazza D\u2019Oro, a 221-unit apartment community in Oceanside, Calif. Built during the downturn in 2010, the Class A project was originally slated for condominiums, which, in Hart\u2019s view, also represented an attractive exit option.<\/p>\n Another enticement was location. Piazza D\u2019Oro was one mile from Tri-City Medical Center, North San Diego County\u2019s largest hospital, as well as a few paces north of State Route 78, which afforded the property excellent visibility.<\/p>\n TruAmerica purchased the asset for $81 million in equity and low-cost debt. Hart enlisted the assistance of CBRE Executive Vice President Bill Chiles, whose San Diego team secured $50.5 million in financing at an attractive 3.85 percent rate with a three-year, interest-only feature.<\/p>\n Also of CBRE, Vice Chairman Brian Eisendrath considers Hart both a source of market insight and a mentor. \u201cI had read up and knew he was very active,\u201d Eisendrath recounted. \u201cI\u2019d heard very good things about him from people in the industry.\u201d After cold-calling Hart in 2006, Eisendrath met him at a National Multifamily Housing Council event in Palm Springs, Calif. The two have been working together ever since. \u201cPeople know that Bob performs,\u201d Eisendrath said. \u201cThat\u2019s why he\u2019s so successful.\u201d<\/p>\n READY TO LAUNCH<\/strong><\/p>\n TruAmerica\u2019s maiden purchase set the tone for Hart\u2019s value-add strategy. Located on 14.4 acres, Piazza D\u2019Oro\u2019s 42 Italian-style townhomes were renting at below-market prices, presenting\u00a0 an opportunity to upgrade the property through improvements to the pool area, leasing office and common areas.<\/p>\n Hart found the value-add space attractive for several reasons. First, demand for quality affordable product has outpaced supply since the 2008 recession, with developers in thriving submarkets targeting higher-income individuals.<\/p>\n \u201cThe multifamily business is undergoing a paradigm shift in that America is shifting its housing a lot more toward multifamily living, away from single-family living,\u201d Hart observed. \u201cRight now, the (multifamily) industry\u2019s gone from 30 percent penetration of all housing to nearly 40 percent. That represents a lot of people, including Millennials in the workforce delaying homeownership and a lot of people who have lived in apartments all their lives.\u201d<\/p>\n Additionally, purchasing older properties below replacement cost offered the flexibility to bolster rents and improve cash flows. Hart saw an opportunity to create value by rehabilitating aging stock, delivering much-needed housing at affordable rates while generating handsome returns.<\/p>\n \u201cHe has a tremendous ability to pull together stakeholders and have them be aligned,\u201d O\u2019Rourke noted, \u201cwhether it be his equity partners, his staff, the lenders that he deals with or the people that he\u2019s either buying or selling from.\u201d<\/p>\n Michael Moran, managing director of real estate at Allstate Investments, first encountered Hart at Kennedy Wilson in 2011.\u00a0 As Hart was starting TruAmerica, they discussed possibilities for collaboration. Three years later, the Allstate team and Hart initiated a programmatic joint venture, which, unlike traditional opportunistic funds, allowed for direct investment without a fee-based intermediary and with more control over capital deployment.<\/p>\n \u201cThat\u2019s a general trend in the institutional investor marketplace,\u201d Moran explained, \u201cbut Allstate was pretty early to pivot. Bob got it immediately. \u2026 This venture would not have been successful had he not had all the deal-making expertise, all the structuring creativity, all the relationships to get deals done and the leadership capability of building, running and growing a team.\u201d<\/p>\n In January 2015, Allstate, TruAmerica and a syndicate of domestic and international institutional investors completed the largest multifamily asset purchase in Southern California in nearly two decades. Acquiring 14 properties for $482 million, the joint venture assembled a portfolio in a fraction of the time it would have taken to buy the properties piecemeal.<\/p>\n