(Photo: Bill Shopoff, president and CEO of Shopoff Realty Investments)
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” – John Quincy Adams
Unprecedented. Uncertain. Difficult. We hear these words almost hourly to describe our current times and they are accurate. At the time of this writing, we are immersed in uncertainty. Where is it going? How bad will it get? When will it be over? We see more than ever how important leadership is in every aspect of our lives: our family structure, our companies, and our governments and institutions, from local to global.
“I think this time period, like many others of marked uncertainty, requires leadership,” says Bill Shopoff, president and CEO of Shopoff Realty Investments. “For me, today, I’m focused on continuing to provide strong, constructive, ethical leadership and productive, decisive, sound decision-making, as the cornerstone of managing our company and its real estate portfolio. This includes effectively executing on the strategies1 of the properties we already manage and own, while at the same time performing rigorous, stress-tested due diligence on any assets we consider acquiring. During a tumultuous, unprecedented time like this, measured, thoughtful decisions will be rewarded in the long term.”
Shopoff provides a positive and inspiring example to his team and partners alike, demonstrating how to successfully weather an economic storm, based on decades of real-life experience. The ability to effectively communicate, confidently make decisions, and thoughtfully reassure those around you is arguably one of the most valued elements of leadership that the business community, and the general public, needs right now.
Bill Shopoff has more than 40 years of business, real estate and investment expertise, growing his Irvine, California-based company, into an industry leader. Shopoff Realty Investments, founded in 19922, sources unique underutilized and undervalued assets, and transforming those opportunities, through creative strategies, into “exceptional value.”
Throughout his career, Shopoff has handled the acquisition, development, and disposition of redeveloped and existing residential and commercial properties throughout the United States. Currently, the company manages and owns a diverse portfolio of exceptional properties, comprised of raw land, covered land, and commercial properties, which will be developed, redeveloped or repositioned “to achieve their highest and best use,” Shopoff says.
During his long tenured career, Shopoff has led his company through several economic cycles including the Great Recession, subsequent recovery, and now the economic uncertainty that has been sparked by the COVID-19 pandemic. Navigating through what many worry will be a severe downturn, Shopoff recommends investors to keep an eye on the long-term, big picture, which he believes, disciplined real estate investors should be doing in any market.
“Right before the pandemic, we invested capital into a new real estate project. Some people have now asked, including some partners, ‘Aren’t you anxious? You just put that capital out and now the market’s changing. Did you pay too much? Is the risk now too high?” he says.
“Despite the uncertainly, I am not. I didn’t buy this asset to flip it quick, or stabilized at full market price hoping the economy would continue to flourish. I bought it for a time horizon that’s beyond what’s going on today, and stress-tested to have a high probability of success in the face of what was already anticipated to be an upcoming recession. I also believe this real estate project is still worth more today then what we originally invested a few months ago, and additionally I expect values will rise again, post-pandemic increasing its value.”
What keeps Shopoff confident in the face of uncertainty is being deeply aware of market cycles – “but not be at their mercy,” he says. “What we at Shopoff do in both good markets and in bad, is always look for something that is going to be a better value in the future, not because of the external economic factors, but because of the value we can proactively create.”
He focuses on value creation with every asset, whether that means securing new entitlements, creating a new business plan for a property, or injecting capital for renovations and to secure new leases. These are the types of strategies Shopoff employs to create opportunities in up or down markets.
“Of course, while we carefully aim to execute on our strategies, we don’t know with certainty what the outcome will be as we navigate the pandemic downturn,” says Shopoff, who adds that he doesn’t see the real estate market facing the stress it did in the Great Recession. “It doesn’t have the same economic components, at least not long term,” he adds.
The immediate problem is the millions of people who have now filed for unemployment. They are suffering. “Yet when the government decided to augment unemployment, it was great for the country. It’s not covering everybody, of course, but it’s covering enough people so it will help provide a safety net for when we emerge from this.”
Fortunately, construction has been allowed to continue in many regions, as Shopoff has several development projects currently underway, including Parkhouse Residences, part of “Uptown Newport” in Newport Beach, California.
The second-quarter performance for the U.S. and worldwide economies will be dramatically impacted even more than they already have and Q3 will likely be difficult as well, experts says. Shopoff expects that the country will be back to lower unemployment and market stability by the end of this year — or early 2021.
“People can make decisions out of fear when it comes to investments,” he says. “When prices drop or there is volatility, they tend to sell. But, when toilet paper goes on sale, they back up the truck. It’s counterintuitive, but when it comes to investments, if prices decrease, many worry they’ll continue to go down further, and some sell. In reality, this is the time to hold those investments and wait until the market rises once again or to buy if you have cash.”
Having the expertise to underwrite and acquire real estate deals — in a time where everybody is pessimistic — is another place where experience and a ‘steady hand’ can be integral in continuing to keep a business on track, and ultimately making it successful.
“We do think, in the next three to six months, there will be interesting opportunities ahead and they’ll be different than the opportunities we we’re looking at last year,” Shopoff says. “We are cautiously optimistic that we’ll be able to leverage our unique relationships and skillset to deploy capital and take advantage of the right real estate, in the right location, for the right price.”
Copyright © 2020 California Business Journal. All Rights Reserved.
1There is no assurance that this strategy will succeed to meet its investment objectives.
21992 to present as Asset Recovery Fund, Eastbridge Partners and Shopoff Realty Investments (formerly known as The Shopoff Group). William Shopoff is the founder and principal of all these entities.
Shopoff Realty Investments is an Irvine, California-based real estate firm with a 28-year history of value-add and opportunistic investing across the United States. The 28-year history includes operating as Asset Recovery Fund, Eastbridge Partners and Shopoff Realty Investments (formerly known as The Shopoff Group). Performance has varied in this time frame, with certain offerings generating losses.
Information contained in this article is not intended as investment, tax or legal advice and people are encouraged to discuss investment decisions with their legal, tax and financial advisors. There is no assurance that future real estate investments and projects will be successful. Alternative investment performance can be volatile and value-added real estate investments may involve additional risks. A real estate investor could lose all or a substantial amount of their investment.
This is neither an offer to sell nor a solicitation of an offer to buy any security. Such an offer may only be made by means of an offering document that must accompany or precede this information. Past performance and/or forward looking statements are not an assurance of future results. Securities offered through Shopoff Securities, Inc., Member FINRA/SIPC, (844) 4-Shopoff.
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