Have Multiple Exits: The Commercial Real Estate Strategy Top Investors Use to Win

Mark Sinnett (00:00)
You know, this might sound a little I may not say counterintuitive, but I would actually say some of the best investors, you know, and again, while I do brokerage as the main business, I have had the opportunity to invest side by side with certain investors, and you know, either through funds or direct investment. And honestly, I think the ability for the lead investor or the person that’s putting together the or that’s going to execute is their ability to have multiple exit strategies. You know, not everything goes as planned.

Michelle Kesil (02:09)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Mark Sinnett of Avison Young, a commercial real estate firm in the Montreal area. So excited to have you here today, Mark.

Mark Sinnett (02:29)
Thank you, Michelle. It’s a pleasure to be here. Really excited to be on this podcast.

Michelle Kesil (02:33)
Yeah, likewise, excited to learn more. Let’s dive in. First off, for those new to your work, can you share what your main focus is?

Mark Sinnett (02:44)
So yes, thank you for that. I am head of what is called a Capital Markets Group. So we are a division within Avison Young that specializes in the sale of effectively investment properties, or as we call them, IPP and income-producing properties. Our focus is mainly on selling either shopping centers, apartment buildings, or multifamily units, industrial properties.

And office buildings, typically with income in place, as opposed to ground-up developments or vacant owner-user properties.

Michelle Kesil (03:19)
Awesome. And how specifically are you working and supporting investors?

Mark Sinnett (03:28)
So from our perspective, you know, I think what we like to look at and how we think about it is the typically for a lot of investors, you know, crystallizing the value that they have created in their ownership of a of a real estate property will happen usually at the time of sale. So we understand that our role can sometimes be very critical in the difference whether the, you know, property has a successful exit and therefore the investment has been successful, or whether you know the success the investment has been so-so, if we can say it that way. And our focus really is to work hand in hand with investors in deciding when is the right time to go to market, how best to go to market. You know, should they just put a public listing on? Should they do it within a sort of private investor network?

And then just really understanding who the potential buyers are and what is it that the criteria that the next investor will be looking for. All of this is what we think of, and it’s really helping also, you know, at the acquisition stage, we can work with a potential investor in building their business plan so that they know that you know they’ll have a successful exit. So you know, we’re at the beginning where we’re advising, but really our focus is at the time of sale, how do we maximize value so that investors really get to crystallize all of that sweat and equity that they put in the deal?

Michelle Kesil (05:48)
Yeah, amazing. And where do you think most investors have the most difficulties in finding like the right deals and coming up with the best strategy?

Mark Sinnett (06:06)
Yeah, so you know, I think it’s one of the things that happens a lot is, you know, it’s easy to get caught up in, you know, maybe what you would call as the flavor of the month or, you know, sort of what everyone is doing. So maybe, you know, in your market you’re seeing a lot of buy-and-flips. So people are buying homes, turning around, renovating them and trying to flip them. I think one of the things that we have seen time and time again is really it’s important for an investor to know kind of what is their skill set, what is their specialty. You know, and that could be renovations, that could be financial engineering. Their specialty could be tenant relations and the ability, you know, to just source better tenants for a property. In some cases, it’s operations. You know, we have clients that can come in, you know, they can streamline the expenses, they can find better suppliers and they can just optimize an asset. And so depending on, you know, the asset itself and depending on at the, you know, what the condition of the property is, that’s where we really try and find the right buyer. I think what we’ve seen sometimes, you know, to dig in a little bit deeper into your question is that buyers will sometimes buy and not have the right skill set. And I think that’s where sometimes, you know, an investor could get in trouble.

So it’s really finding an investor that has the right skill set to execute on a business plan, you know, that will generate, you know, successful and strong returns.

Michelle Kesil (07:39)
Right. And what do you think differentiates a top-performing investor from the rest?

Mark Sinnett (07:45)
You know, this might sound a little I may not say counterintuitive, but I would actually say some of the best investors, you know, and again, while I do brokerage as the main business, I have had the opportunity to invest side by side with certain investors, and you know, either through funds or direct investment. And honestly, I think the ability for the lead investor or the person that’s putting together the or that’s going to execute is their ability to have multiple exit strategies. You know, not everything goes as planned.

I guess it was, you know, Mike Tyson that said you could have the best-laid plan until you get punched in the face, and you never know what happens, right? City regulations, zoning bylaws could come into play, building condition could not be what it is. All of a sudden, you know, a tenant ceases to operate. So there is always going to be the unexpected. And I think it’s the ability to be able to pivot and to think of multiple kind of exit strategies. And you know, maybe what I mean by that is, you know, maybe the idea is you don’t have to necessarily sell the building and the opportunity could be to refinance the property and be able to return, you know, the equity based on a refinancing strategy. Or perhaps instead of selling it to an investor, you end up selling it to a user, to the tenant in place as a, as another exit strategy. We’ve seen some where, you know, they started, they were thinking of doing office condos and they finished by converting it into a residential complex. So I think it’s the ability to roll with the punches, look at how you can exit an asset and not just focus on one single business plan and you know, if that fails, you’re, you know, kind of out of luck.

Michelle Kesil (09:39)
Yeah, absolutely. And what do you feel have been some of the main keys that have allowed your business to grow and run successfully?

Mark Sinnett (10:23)
Time. You know, I’ve been at this now as a commercial real estate broker in the same market for just under 25 years. I’ve realized, I think, particularly on the brokerage size, brokerage side, excuse me, it is oftentimes a means to another end. So I think in the real estate brokerage market, a lot of people will dabble in brokerage for a few years and then end up on the ownership side or end up on, you know, the lender side or it could be on the buy side. And I think, you know, to have been in brokerage exclusively for over 24 years is one of the successes. You really I’ve been through three cycles, you know, in the real estate market here in Montreal. And, you know, I’ve had the fortune to watch, and I would say the fortune and the pleasure to watch transactions or properties that we’ve sold and then had the opportunity to resell them, you know, several years later and, you know, see the success that some of our clients have had with their investments. And, you know, that’s oftentimes, you know, it really gives you insight into what worked and what didn’t.

Michelle Kesil (11:36)
Yeah, absolutely. And what are you most focused on solving or scaling to next?

Mark Sinnett (11:47)
I think we’re focused on you know, the constant evolution, how to improve our process, how to offer on a day-to-day basis a stronger service. You know, I think I could say for the business that we’re in specifically, you know, there’s a lot of times where we’ll take a mandate where a client will ask us to sell his building at a unrealistic price.

Or maybe it’s not an unrealistic price, but it’s a price that today the market just wouldn’t accept. You know, and I think it ultimately at the end it’s lost time, lost energy, and it’s what I’d like to call a failed process. And you know, we’d like to get to a point where you know clients come to us and the process yields the results. And you know, that’s tricky because we don’t always have perfect information, but what we’re looking, you know, and more and more focused on is how do we give on day one our client the best advice possible, even if it’s not the advice they want to hear and it might just be it’s not the right time to sell. And maybe the client will say, well, I still want to try. And maybe that’s where they might want to work with someone else in that in that period. But when they know they need to sell, they need that certainty of closure, you know, they need to exit the property, they need to return, you know, the money to the investors, they’re gonna call us because they know we’re gonna, you know, it’ll be a frictionless process, there’ll be certainty of closure and you know, we will work to maximize value.

Michelle Kesil (13:23)
Definitely. And as the market is a little bit different and may be more uncertain right now, how do you suggest investors navigate things?

Mark Sinnett (13:39)
Yeah, I mean, that’s a great question. I would say, you know what? And this is kind of the benefit of looking at investments today, is you’re going to, if I can call it underwrite or look at opportunities, probably with a conservative lens. You know, I don’t think today is the time to take or not to say take not the time to take risk, but I think in today’s market, we are seeing a little more risk aversion and we’re seeing groups be a little bit more conservative. So what’s interesting is that while it’s a down market, the acquisitions that you’ll do today, or if you’re looking at buying or looking at making an investment, there’s a likelihood that what you buy today will probably have a better chance of succeeding because you’re not thinking right now that pricing is always going to go up, that there’s always going to be demand from tenants, that you know, if you put a hundred thousand dollars or a million dollars into a property, you’re guaranteed to double to double the value of the building.

I think in this environment, you know, you’re going to naturally take conservative views. What I actually find is, and again, this goes back to having done this for a few years now, it’s when investors start to take things as absolutes. You know, yeah, rents are doubling right now. Or yeah, for sure, you know, people will pay a four cap, as a lot of our clients like to say. And I think as we start to hear more and more absolutes, that’s when you kind of know there’s a bit of a bubble or a bit of a peak, if you will. And that’s where sometimes people, you know, not to say we’ll get hurt, but will find that the investment didn’t go as they necessarily thought it would. So I think today is a great time to look to kind of jump in and to begin investing and to think about investments because it’s not easy. And I think that is when, you know, you’re gonna be a little more smart, a little sharper about it. So that would be my thought.

Michelle Kesil (16:17)
Absolutely. And what advice would you give to an investor that’s wanting to get into the market now?

Mark Sinnett (16:28)
Yeah, I think, you know, first and foremost, do your research and your homework. I think that’s where everyone will tell you to start. I also think you know, call around, talk to owners, talk to brokers, talk to competitors, you know. And when I say competitors, if you know that someone else is, you know, doing investments the same way that you’d like to do investments, you know, if let’s say you’re someone who’s looking to buy land and develop on the land, you know, call a local, try and speak to the local developers, try and get to know them. Why do I say that? I think, you know, at the end of the day, as much information as you can get about the market and understanding the market that you’re looking to go into, you know, perhaps even go and be a mystery shopper and see, you know, what are they renting apartments for next door? All of that will give you a sense of where you think you can kind of be a difference maker, have a diff be a differentiator. And I think ultimately it’s just looking at how you can find your niche. I don’t think there’s a perfect investment out there. You know, there to say that there’s a home run, I think is you’ll get lucky. But I think if you’re studious and you do your homework, you know, you’ll, you know, you’ll do well.

Michelle Kesil (17:49)
Yeah, absolutely. Thank you so much for sharing all of your insights.

Mark Sinnett (17:55)
Thank you.

Michelle Kesil (17:57)
Before we begin to wrap up here, if someone wants to reach out, connect, and learn more, where is the best place for people to find you?

Mark Sinnett (18:05)
So definitely through LinkedIn. You can find my name pretty easily. DM me at any time, otherwise by email, my email is [email protected].

Michelle Kesil (18:21)
Perfect. Well, appreciate your time and your story. Thank you so much for being here.

Mark Sinnett (18:27)
Excellent. Thank you.

Michelle Kesil (18:29)
Of course, and for the listeners tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Mark who are building real businesses and we’ll see you on the next episode.