his firm. But the more Primo talked to Boesky, the more intriguing a merger of the two firms became.
“The only way to create value is to take risk, but you have to build a better mousetrap as well,” says Primo. “Being African American means that we have to build something better.” With this first acquisition under his belt, he says the process for creating a firm that is better than before is well under way.
capri’s portfolio includes the crest at fort lee, a 350-unit luxury apartment complex in new jersey acquired for $84 million, and river east in new york city, an $80 million, 196-unit developmentproject started in august.
THE CHALLENGE OF GROWTH
“We’re going back to our roots in the pension advisory business,” Primo says. In these tough times, he has decided to play to his strength.
Jon Bauman, executive director of the Teachers Retirement System of the State of Illinois, says Capri is its longest tenured real estate separate account manager and its largest. The firm is skilled enough to manage properties from “the four main food groups of real estate: office, industrial, retail, and apartments,” he says.
“We gave them a real estate portfolio that had been managed by other real estate advisers, and that portfolio had a lot of investments that were not institutional quality properties,” says Bauman. “What Capri did for us is they made good decisions about which properties to dispose of and which ones could be, with minimal investment, improved. And, they did a great job of maximizing the value of the assets in the five- to 10-year period, which is reflected in their results.”
Bauman says Capri was in the top quartile of its peer group for the one-year, three-year, five-year, and 10-year periods ending June 30, 2004. The company’s record managing the $820 million real estate separate account has been so exemplary that last year it won a commitment for an additional $100 million to go into the Apartment Fund III and another $20 million for its Select Income II fund.
It’s this type of management track record that Primo is banking on to grow his business over the next five to 10 years. He will be challenged to find bargains in an industry that has seen real estate prices skyrocket in recent years. To illustrate, housing price appreciation for 2003 was 8.4% and 11.2% for 2004, according to Freddie Mac’s Nothaft. He says beyond 2005, long-term appreciation rates should moderate to about 5% to 6%.
Robert L. Johnson, CEO of RLJ Development L.L.C. (No. 40 on the BE INDUSTRIAL/SERVICE 100 list with $92.2 million in sales), who is building a real estate portfolio focusing on the hotel industry, waxes positive on Primo’s accomplishments. He says Primo has done “an outstanding job raising capital and deploying capital in the best interest of investors,” going so far as to give him credit for “setting the mold for what I’m trying to do in the [real estate] fund management business.”
To grow his $2.5 billion real estate advisory firm, Primo