Isenberg Grad Finds New Opportunities in Shifting Real Estate Markets
October 14, 2015
Looking back on his solid foundation as a finance major at Isenberg and his four years in GE’s Financial Management Program followed by a Harvard MBA, Pat Whelan ’80 came to an inescapable conclusion: “I didn’t want to do the Wall Street thing,” he told Isenberg students in Robert Wilson’s course, Real Estate Finance, Analysis and Investment.
Instead, he chose an innovative career in real estate, including 25+ years of executive management challenges with investments and operations in large public and private companies. Whelan is CEO of HavenBrook Homes, based in Atlanta. It’s a $500 million REIT (Real Estate Investment Trust) manager of preowned single-family rental homes in Florida, Georgia, Alabama, and Minnesota.
Whelan’s current focus illustrates his prowess as a career-long student of shifting trends, in both real estate and financial markets. “The 2008 recession was a catastrophe for the financial markets,” he remarked. “Homeownership dropped from 68 to 63 percent. House prices collapsed, but rents did not.” That created, he continued, tremendous arbitrage opportunities and a new market for refurbished, preowned home rentals. It also generated a new real-estate asset class.
In spite of that, only 1 to 2% of the 15 million available rental homes have been “institutionalized and securitized.” It’s a trillion-dollar market, Whelan noted. “In my world, debt is at 3.5 – 4 percent and NOI (net operating income) margins are 6 to 8 percent. You can leverage 65-75%; thus, your levered returns are in the low to mid teens. Pretty good in a zero interest rate environment. That’s why you have many sovereign and private equity funds entering this market.”
Poised for Opportunities
Whelan got into the game in 2012 as CEO of Beazer Pre-Owned Rental Homes, which he grew to an institutional-grade private REIT.* When Whelan orchestrated its sale in 2014 to American Homes 4 Rent, his company had a portfolio of 1,300 properties in Arizona, California, Florida, and Nevada.
Ever a seeker of silver linings, the Isenberg grad responded to the housing crash decisively in 2008 by founding Phoenix-based Land Advisors Capital. An Affiliate of Land Advisors Organization, the firm sources private and hedge-fund capital to acquire distressed residential assets.
“Life is all about gaining exposure to different things,”
Whelan told the students. To that end, he has been president and COO of a company with extensive domestic and international recreational, residential, and golf communities. He was a top level executive at two publicly held companies: an apartment REIT and a real estate media and technology firm. And he held senior management positions with a company that developed a national property management apartment portfolio and a second that, on the ground floor of REIT investments, recapitalized a large portfolio of retail, office, and industrial properties.
“Isenberg and UMass were my foundation,” Whelan emphasized. “I got a terrific education in both finance and economics and was speaker of the student senate. With a million-dollar budget, we started the first student-run credit union in the nation and a bunch of student business co-ops. This place was awesome.”
Today, the Isenberg grad is as reliant on big data technologies as his classroom audience of digital natives. “Tech is the reason we can do what we do,” he remarked. “We depend on mobile and cloud- based applications to determine demographics and income levels of target communities, their traffic flows, and housing stock characteristics. We deploy them to understand why investing in South Hadley and Scottsdale are different. Every market has its own characteristics. You have to track both macro and micro. As Isenberg students, you have the technologies and the education to do all of that and more. Do what’s fun and do all you can.”
*The firm was “sponsored” by Beazer Homes Inc. and Kohlberg, Kravis, Roberts.