Academics Applied to the Real World

An interview with Angel Brunner, President, Pettles Group, Washington D.C. Georgia Ragsdale, CEO Watermark Financial Inc.

Q: Tell us a little bit about your company?

A: The Pettles Group I put together in order to provide real estate development services for residential and commercial projects across the country, this would include site identification, due diligence, acquisition, redevelopment, design, development, management, feasibility analysis, the whole thing. On top of that, investment advisory services, to includes debt and equity placement, and financial legal structures for investors and developers.  I have projects in Vermont, DC, Sacramento, San Francisco, really an opportunistic venture whether I am representing the developer or the investor. 

Q: Tell me a little bit about your background?

A: I went to Brown on scholarship and studied urban policy and development, and then went to Princeton on scholarship as well to study economic development urban planning – I got a masters there in urban planning and a masters in public policy with a focus on economic development. 

Q: With such a great background, you can do whatever you want – you have worked in corporate backgrounds and entrepreneurially. Do you have a preference? 

A: Yes, I do, definitely entrepreneurially. I wouldn’t know that if I had not worked corporately as well. Entrepreneurial life is faster; I can make decisions with a small team and make quick decisions quicker. Some of the process oriented ways of corporate culture can hinder you, both in the execution and the end product.  I found that some of the structure that is necessary in large structures is not helpful to moving forward a real estate project.

Q: Every business is cyclical, when do you see the current decline coming around?

A: That is impossible to predict, I studied macroeconomics under Bernanke, the head of the Fed and you can’t get him to pinpoint a date when we will have a turn-around in the economy, I wouldn’t be so presumptuous to think that my estimate would be any better (laughs).

Q: That is, I think the ultimate answer, that nobody knows. There are unforeseen circumstances. Who would have predicted the secondary market would vanish in two months. Let’s hope that we will be resourceful enough to get through this. 

A: One of the things in this market dynamic is that the capital dried up on both the equity and debt side for both institutional investors as well as local developers that require more risk taking on the part of their financial partners.  There has been a resurgence of short-term lending opportunities that are equal secure to what they were two years ago but there are opportunities for them now because institutional money or local banks would come down to that market they aren’t willing to look at those risk profiles now.

Q: We have seen a retreat to only regional portfolio lenders who have had the analysists comb through their portfolio to determine what they can do; there are few left standing and they have a narrow funnel of what they can do.  Anything over $10,000,000 becomes much more difficult.  In terms of foreign capital flowing into the US, maybe you can share your perspective on that. 

A: Yes, definitely, I have a unique window into that opportunity. One of the things the Pettles Group does is provides exclusive investment and advisory strategy to Unified America, which is a company that helps foreign investors find projects in the United States in order to get green cards. US Immigartion service has a program that if you create ten (10) US jobs with $500,000invested then you have the access to apply for your green card, much like the H-1 visa – which they run out of quickly. This is an underutilized program, 10,000 were set aside for this program last year and only 1,500 used.  If you can figure it out, there is a fair pool of foreign capital for this. This has been buoyed by the weakness of the dollar, for countries that are not tied to the dollar, such as Europe and Kuwait. The second thing we have seen is that even though we are in a recession, foreign countries view the United States as a sound investment.  As they put money into markets like Dubai and China, they want to diversify with a safer investment such as the United States.  Investors are willing to take a lower return with better risk premium.

Q: Basically you are saying that US values are essentially solid, and fluctuations are not as extreme as in other global markets. 

A: Yes, foreign investors still view the US as a solid investment.

Q: Anything else you would like to share? Parting comments?

A: With people with capital, there are still tremendous opportunities in Washington, DC.  Prices are coming down a little, and the developers are giving up some on the front end so and this is essential a recession proof economy so it is a great place to park your money.

Angelique Brunner, President, Pettles Group.  Pettles Group is responsible for sourcing and structuring all opportunities for EB5 America, a commercial real estate investment manager for foreign investors seeking US residency in exchange for US job creation.  Current projects include a condo-hotel for Sugarbush Resort in Vermont and two mixed-use developments in Washington DC.  She can be reached via e-mail: abrunner@pettlesgrp.com .

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