Attendees of the 33rd Annual Cornell Real Estate Conference had the pleasure of hearing from Robert Faith of Greystar Real Estate Partners on the evening of October 15th. Greystar develops, owns, and manages multifamily assets consisting of around 400,000 apartment units in over 1,600 apartment communities. It is the largest residential property manager, but the company formed from quite humble roots.
Faith grew up on a farm, and his father wanted him to go to college for a technical degree, so he went to the University of Oklahoma and received a BS degree in Petroleum Engineering. However, upon graduating, the recession in the 1980s hit the job market hard, and Faith decided that “since no one was hiring, I figured I’d go back to school.” Along with a rare few, Faith was accepted into Harvard’s MBA program straight out of his undergraduate degree, and went on to accept a job at the Trammell Crow Company, then the premiere developer in the United States. He noted that his salary would have been many times greater if he had accepted a position at Goldman Sachs, however, since Trammell Crow provided generous incentives to top performers, he decided to take the challenge.
Early-on when working for Trammell Crow, Faith noticed that due to the cyclical nature of real estate, businesses that survived throughout the cycles were ones with more diversified income streams. He set up Greystar as three main separate businesses that match well due to the cycles: development, ownership, and management. As the cycle winds up, the development side of the business grows, and as the cycle winds down, it shrinks, but throughout both phases the management and ownership side of the business provides support for retaining great talent, and paying overheads. The two sides of the business are essential to Greystar’s strategy of being an ‘evergreen’ company: a “balanced focus on both the service side of the business and the principal side [that] gives us opportunities to grow wherever we are in the cycle.”
In 1991, he co-founded Starwood Capital Partners, L.P. with Barry Sternlicht, and proceeded in acquiring properties going-up for auction as a result of the Savings and Loan Crisis in the early ’90s. Faith commented that they had very little money at the time, but because property loans were being sold at such a low basis to value, the opportunity could not be missed. He later left Starwood to found Greystar Real Estate Partners in 1993 in Houston, TX. Asked if he had any regrets leaving Starwood shortly after co-founding the group, Faith replied that “I think we’ve done pretty well,” to which the audience chuckled.