Institutional Multifamily for the Private Investor — with Nick Matus, President of Benedict Canyon Equities

Andrew Kirsh (0:00)

Hi, I'm Andrew Kirsh, co-founder of Sklar Kirsh. On this podcast, I interview industry leaders. You'll hear their real-time opinions on today's market, their background, unique career highlights, and guidance for newcomers to the industry. This is The Kirsh Connection.

Welcome to another edition of The Kirsh Connection. Federal Reserve increased rates by a quarter point. Ten-year treasury hit 5.2%, a 20-year high. The last time rates were this high, I was a measly associate at Latham and Watkins. My wife Courtney was in law school. A lot has changed in the last 20 years, but that's how long it's been since we've seen over a five-handle on the 10-year treasury. What does that mean for our business and real estate? Clients are concerned.

There is a lot of panic. There's a lot of distress. There was already a lot of distress in the industry. It has now just been exacerbated. There are clients who went under contract at a certain price, had their 30-day due diligence period, and pricing or valuations of their asset has changed completely because of the sudden increase in interest rates, and them going to sellers asking for a retrait. Those are tough conversations, but it really reflects the reality of what is going on in today's market. So stay tuned. We'll see how that affects fourth quarter transactions. Now, on this week's episode, I've got Nick Matus, the president of Benedict Canyon Equities on the show. We talk about the impact of this sudden interest rates spike, and he believes, yes, this presents a lot of challenges to his company and to his peers, but he also sees a lot of opportunities because of this increase in interest rates. I hope you enjoy my conversation with Nick Matus.

Welcome to another edition of The Kirsh Connection. I'm here with my good friend, Nick Matus, president of Benedict Canyon Equities, otherwise known as BCE. Nick, how are you doing today?

Nick Matus (2:15)

I'm doing great. Thank you so much for having me. It's an honor to be here with you.

Andrew Kirsh (2:18)

Absolutely. I think this is our first Friday afternoon filming. Usually it's like a, I don't know, midweek morning, so it's a different flavor. We're not on the golf course. We were on the golf course one Friday, a couple weeks ago, and it was magical.

Nick Matus (2:31)

So that was fun.

Andrew Kirsh (2:33)

Yeah, that was a lot of fun.

Nick Matus (2:34)

I hope I didn't ruin your Friday afternoon schedule here.

Andrew Kirsh (2:37)

Not at all. Actually, one of my best rounds was at Hillcrest.

Nick Matus (2:41)

You played well.

Andrew Kirsh (2:42)

Yeah, that was fun. Usually, clients don't like it when I play that well because then they think I'm not working hard enough.

But I get it. We had a good round, you and Jason O'Lullian, and the best thing about that round was, I think we played in like three hours and five minutes.

Nick Matus (2:59)

It was quick.

Andrew Kirsh (3:00)

It was great.

Nick Matus (3:00)

We were efficient.

Andrew Kirsh (3:01)

That's how golf should be.

So enough about golf. Let's talk about you. How about just for those that may not know about BCE, just a high level synopsis of what you guys do.

Nick Matus (3:16)

Sure. BCE, Benedict Canyon, is a real estate private equity firm that focuses on multifamily investment and management throughout the Western US. Our focus is really on the renter by necessity, so hardworking blue and gray collar American families who need nice, safe and affordable places to live in a renovated setting. So we're really taking B-multifamily product and renovating it and operating it to a B-plus spec. And we're an institutional firm, but entrepreneurial private operators. So we tend to buy below that of, call it institutional buyers, but higher of typical mom and pop buyers. So a typical acquisition for us is around $40 or $50 million.

And we really focus on managerial upside, improving the product, interior renovations, common area amenities. And we really focus on 14 markets across nine states, west of Colorado and New Mexico, all the way over to California and up to Seattle.

Andrew Kirsh (4:20)

Okay. We'll get more into the markets, deals that you guys have been doing. But this week, the Fed raised rates by a quarter point. And it's been on every conversation. It's been like the number one topic with me and clients. And it's funny, I'm surprised because it's like everyone knew it was coming. Maybe a few were surprised how, and you see the 10-year now trading around five. It was over five now, maybe just under five while we're recording.