Lance Pederson

follower of Jesus, father of five, entrepreneur, fund manager, podcast host

[Lance Pederson @lpederson]

@ashiqur_ai Leads

[POWERS Podcast @theFORTpodcast]

From the moment I met Andy Weiner, I knew I had met someone special. When others are zigging, he’s zagging.

Andy’s company, RockStep Capital, is one of the most prolific buyers of shopping malls in secondary/tertiary markets across the US.

RockStep is also unique in that is capitalizes each shopping mall with local investors that have incentive to see the property succeed.

I was blown away by how he finds the right investors for each deal.

Andy Weiner, President of RockStep Capital, started RockStep Capital Corporation in 1996. Weiner has built or acquired over 9 million square feet of shopping centers throughout the United States.

Before founding RockStep Capital, Weiner served as Vice President of Operations for Weiner Stores, a chain of 159 family clothing stores with locations in Mississippi, Louisiana, and Texas.

We discuss:
- Andy’s mall thesis
- A Deal Breakdown of a mall in Small town America
- Implementing a successful company culture via the Rocksteps

1:20 - Andy’s background
5:25 - Retail pricing structures
10:29 - Falling in love with small-town America
14:35 - Andy’s mall thesis
17:44 - What Andy looks for when underwriting a mall
26:10 - What are deal killers for you?
29:59 - Capitalizing and Closing deals
34:52 - Deal breakdown: Manhattan, KS
41:57 - Zombie malls
45:19 - Government funding + battling Amazon
48:24 - Alternative ways to monetize mall assets
51:06 - The RockStep way

[Lance Pederson @lpederson]

@chernobelskiy My overarching philosophy when reviewing deals people send me is to, of course, highlight the red flags, which could be deal killers, but also to identify whether or not I believe the LP will be properly compensated for the risks they will take if they decide to invest.

[Lance Pederson @lpederson]

If it’s solely for pursuit costs (which could end up with deal deal costs), you might need to compensate the LPs a bit more for that. Like most things, it kind of depends on your strategy and the likelihood you might have dead deal costs. Probably easier to get LPs minds wrapped around it if the fund will be putting additional capital into each deal and getting better deals economics plus the diversification for accessing your deal flow via the fund.

[Lance Pederson @lpederson]

I think readiness is driven by having a steady stream of deal flow. At least 4 deals a year.

I’ve always considered it the most logical step between syndicating each deal individually to an LP blind pool fund. Kind of like training wheels.

Sometimes JV partners aren’t thrilled about it so best to keep availability to it to your best LPs.

As far as economics go, shoot for a structure that ends up providing the GP fund LPs with at least a 15% better return than the JV equity guys get. There are quite a few ways to structure it but depends on how you tend to structure your underlying deals.

[Lance Pederson @lpederson]

@Skridaggio @chernobelskiy I agree. RoC first then the 85/15 split could work. Just a bit unconventional. Sticking with vanilla structures seems best.

[Lance Pederson @lpederson]

@RepeGent @chernobelskiy It just means that the LPs (85%) and the GP (15%) will split all profits starting with the first dollar. 15% is the GP Promote. There is typically a Preferred Return paid to LPs first (e.g., 8%) before the GP earns their Promote.

[Lance Pederson @lpederson]

@chernobelskiy Totally agree with @bobbyfijan. I was telling someone about your biz this morning. This very topic came up and we both felt like a person would have to abstain from reviewing deals with GPs you have close relationships with. Too hard to eliminate personal bias.

[Lance Pederson @lpederson]

@michael_t02110 Curious to hear what your main objections are?

[Lance Pederson @lpederson]

@fortworthchris Our philosophy has always been “put the money where the work is” when structuring investment vehicles.

[Lance Pederson @lpederson]

@jmf_5 @fortworthchris You used to see this way more often 5 years ago. When I do see it these days, it’s always a blind pool fund and they never get off the ground.

[Lance Pederson @lpederson]

@jjtejkl I’m headed to the airport. Sorry we weren’t able to connect.

[StripMallGuy @realEstateTrent]

To honor the folks who have made Real Estate Twitter (ReTwit) what it is today, and keep spreading the word about the folks who share their unique knowledge daily, I will donate $20 for every ReTweet this gets.

$15k max, any charity @moseskagan chooses.

https://t.co/chHTqEx2V4

[Lance Pederson @lpederson]

@AdamB1438 Yep. I'm here. I'll be at dinner tonight.

[Lance Pederson @lpederson]

@ericwilsonRE @REconveneLA It’s trying!

[Lance Pederson @lpederson]

@SkolCapital No. 1 Taxes

[Lance Pederson @lpederson]

@ChrisJBakke @REconveneLA @sweatystartup @moseskagan Looking forward to connecting IRL!

[Lance Pederson @lpederson]

@mjking @moseskagan @fortworthchris @Keith_Wasserman @sweatystartup I’ll be there! Looking forward to it!