ULI Arizona’s ‘Shark Tank’ participants get real

The Urban Land institute’s Arizona District Council is bringing together real deals and expert money in an event tailored after popular investment reality show “Shark Tank.” Entrepreneurs present real estate development proposals to a panel of ‘sharks’ (read: veteran real estate investors) and an audience of real estate professionals with hope of being awarded investment capital.

ULI-AZ’s “Shark Tank” event features three diverse investment proposals. Candidates are chosen based on their experience, the interest value of their deal and an ability to make a concise and captivating presentation.

The top proposals are then selected as the feature presentations at the Annual Shark Tank Program. When looking at applications, the council seeks proposals that appear to have a viable strategy and applicant who has the ability to analyze a project and present it in a concise way, says Joe Blackbourn, tank moderator and president and CEO of Everest Holdings.

“It is really about education more than anything else,” Blackbourn says. “The ‘Shark Tank’ is really intended for the audience and the applicants to learn how the financial markets react to real estate opportunities.”

This year’s event — the third annual — will take place Nov. 5, and the panel of expert ‘sharks’ are Meritage Homes Chairman and CEO Steve Hilton; Founder and CEO of Pivotal Group, Francis Najafi; and Robert Sarver, chairman and CEO of Western Alliance Bancorporation.

“It allows people who have development ideas and unique propositions to see how an investor, someone in the business, would perceive their proposal and to help them approve their proposals where they are weak or not sound,” Hilton says. “It is more about the people in the audience potentially investing and the different opportunities.”

Presenters gain exposure to more than 200 industry professionals, including an array of lenders, private investors, developers and architects who can provide capital and expertise to help bring applicants’ projects to fruition.

As the program enters its third year, AZRE asked where tank-invested projects are now.

Jason Boyer, artHAUS

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Jason Boyer, artHAUS. Photo by Laura Burnett, AZ Big Media

In 2013, when architect Jason Boyer’s condominium project artHAUS was still in concept, he was selected to participate in the first “Shark Tank.” Boyer had 20-plus years of experience as an architect, but this was his first real development project.

“What I was there to do was to really raise awareness about my project and try to generate interest in getting the financing for the project completed, which is not traditionally where my skillset lies as an architect,” Boyer says.

artHAUS is a 25-unit residential urban infill development, adjacent to the Midtown Phoenix Arts and Entertainment District. The tank was an exposure point for Boyer to connect with people of influence in the Arizona real estate and development world and gave him credibility in the community. The tank also provided Boyer with feedback. Everything the sharks said has ultimately come true in one form or another, Boyer says.

Boyer didn’t get a deal right out of the gate, but what he did get was a group of people interested in him and his project as well as people were now willing to answer the phone when he called. Boyer says he believes what the sharks liked about his proposal was the the project’s temporal relevancy. He says his pitch was well conceived, but the sharks questioned his background as developer due to his lack of depth in that area up to that point. This was something he was very aware of as a hurdle, but things weren’t over for artHAUS.

“In the end, the way I got my project funded was through a combination of relationships and just tenacity (by) sticking to it and believing in the project and the merits of the project,” he says.

Construction began on artHAUS in May and is expected to be completed in May 2016.

“(‘Shark Tank’) is a voice for up-and-coming entrepreneurial developers in town to get out there,” Boyer says. “It raises awareness for young professionals who have great ideas and are looking for a venue to voice them.”

Nick Andrews, Family Fun Centers of America

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Nick Andrews, Family Fun Centers of America. Photo by Robin Sendele, AZ Big Media

Nick Andrews is a developer, real estate broker and president and CEO of Fun Centers of America. Andrews pitched Fun Centers of America at Talking Stick Resort to the tank in 2014. The center would be one of the largest and most technologically advanced family entertainment center of its kind.

“The difference between our project and the other projects is that the other projects were straight real estate and ours is real estate with operations,” Andrews says.

The entertainment facility is just less than 67,000 square feet, based on the architectural renderings, and is on approximately six acres of land. The center will specialize in family fun and cater to k-12 students with rock climbing, go-karts and themed birthday party rooms among the attractions.

“It is like Dave & Buster’s meets Crackerjaxs, but with all the new games and attractions that recently came out,” Andrews says.

For his presentation, Andrews says the beauty of the project was that his team already had the ball rolling with its lease at Salt River Fields — a shared services agreement, business plan, private placement documentation, subscription agreements prepared by Family Fun Centers of America’s legal team and had everything it needed to begin raising capital.

The key for the presentation was to take the main points of the business plan and lay out in a way that people clearly understand them in a short amount of time, Andrews says.

“There is nothing like (the ‘Shark Tank’),” he says. “How cool is that, guys like me and my partner who are visionaries doing amazing family fun type projects here in town have the opportunity to pitch our case to some of the brightest minds in the real estate industry in front of 200 plus Urban Land Institute members, which are notably some of the brightest people in town?”

For Andrews, the tank provided exposure and a learning experience. At the end of it, he says, he came away with more confidence about the project.

Janet LePage, Dolce Villagio

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Janet LePage, Dolce Villagio. Photo by Laura Burnett, AZ Big Media

Janet LePage has been actively investing in Phoenix since 2008 and is the founder of Western Wealth Capital Ltd., which provides investment properties in high-growth markets.

LePage pitched for equity in the amount $2.4 million in a 37-townhome development. She purchased Dolce Villagio via short sale because the property was going to go into foreclosure. Her business plan was to put in management, normalize rents because they were below market value, improve curb appeal and to draw in the right tenant base.

Two weeks before the event, the presenters undergo a pre-shark tank interview to prepare and tweak their proposals.

“I thought I knew my stuff,” she says. “I knew this deal very well, but in matter 15 minutes I became very clear that there were a lot of things I didn’t know.”

When she was onstage two weeks later, she was ready for all the sharks’ questions that ranged from how the rent per square foot compared to neighboring developments to larger macro economical questions. She was able to go head-to-head with three well-respected people in the industry.

“Sometimes when people are really tough on you it is absolutely the best experience because there was huge growth to the depth of knowledge that I really needed to make sure i could get investors and continue to secure,” she says.

LePage says she believes what the sharks liked about her proposal was that she knew the microeconomics of the deal, had a tactical business plan and clearly walked them through how they were going to make money. LePage ended up receiving a deal from an audience member.

“From that point forward, I have a lot more publicity in my name and so it added to just the overall credibility of what I have been doing,” LePage says.

Eight months after making a deal, Dolce Villagio has been painted, recieved new landscaping, rents have increased to market as units turn over and everything is going exactly to plan, LePage says. When LePage purchased the property it was making $550,000 a year and now it makes $720,000 a year.

Investors have since seen a return on their equity of 120 percent and LePage has done three additional deals beyond Dolce Villagio with the partner she received from the tank.

“It is a really fun event that puts like-minded people in a room, and great things happen when you put like minded-people in a room,” LePage says.