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John Livingston, Co-Founder and CEO of AECOM Capital: A Developers Mindset

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Tiya Jain

Tiya Jain is a Baker Program in Real Estate graduate student. Prior to Baker she completed her chartered accountancy course in India (Equivalent to the CPA) and has 6 years of post-qualification experience with multinationals such as Ernst & Young, Deutsche Bank, Deloitte etc. Her last position at Deloitte involved advising large developers and private equity funds on funding, structuring and cost saving transactions in line with the local laws and regulations. Prior to Deloitte, she helped Aldia Capital, a boutique investment advisor in India, set up base in Mumbai. She was responsible for creating trusting relationships with the local real estate developers for the firm to secure $100 mm mandates. Tiya also strengthened local banking and financial relationships to the firm to tie up both ends of the deal making process. She is also interested in sustainable energy solutions, solar technology and she implemented the same for 3 housing societies in her neighborhood in Mumbai to cut energy costs by 25%. At Cornell, Tiya is the VP of Events for the Cornell Real Estate Women’s club that looks at leveraging opportunities for professional growth for women and eliminating the gender differences in the real estate industry. Tiya is also a Junior editor for the Cornell Review. The assignment involves contributing high quality research articles for the Cornell yearly journal and also interviewing real estate industry leaders who speak at the Distinguished Speaker Series. She enjoys playing Sudoku and practicing eastern philosophies such as yoga and meditation in her free time. Post Baker she would like to work in real estate investments and finance.

Last week at the Distinguished Speaker Series, the Baker Program in Real Estate had the pleasure of hosting John Livingston, the Co-founder and Chief Executive for AECOM Capital. As shared by Mark Hughes, 2018 Baker Program student who had lunch with the speaker, “Mr. Livingston reminiscenced his experience of partaking in the transformation of Times Square because he felt that he was giving back and really helped to transform NYC”.

John Livingston: CEO & Co-Founder AECOM Capital
John Livingston: CEO & Co-Founder AECOM Capital

Mr. Livingston shared his recipe for success, simply ‘work harder and smarter’. According to him, development is a team sport and one needs to get along with people. He considers himself to be essentially a development person since his background is in development. He uses the same mentality while perusing deals for AECOM Capital.

At AECOM Capital, the investment strategy reduces risk by pursuing deals that consisting of construction and entitlement guarantees. In some situations, AECOM will rent their balance sheet at the rate of 1%, where the company provides a backstop. They operate in a more hands on basis and are involved in daily, weekly meeting, raising debt and equity and the guarantees. AECOM’s business model is more detail oriented and not transactional, as in the case of raising capital via private equity. Matthew Green, Baker Program student Class of 2017, stated “what stood out about John Livingston was how nimble he and his firm are.  The variety of deals and developments that they have completed since 2013 speak for themselves”.

Sunset Time – West Hollywood, California

Sunset Time - West Hollywood, Los Angeles, California
Sunset Time – West Hollywood, Los Angeles, California

 

Speaking on the current market conditions, John stressed the importance of being careful, stating that the slow down exists essentially in the $5 million homes that have a per sq.ft. price of $6-10k price.  For example, AECOM’S Sunset Boulevard Project in Los Angeles (40 high end condos) has square foot prices of $2-3k, and expected healthy sales movement. He succinctly pointed out that people look at NYC as the indicator of the real estate market but the real estate all over the country doesn’t go as per NYC standards. John does see the development cycle coming to an end in NYC, but other gateway cities having sufficient opportunities in the near future.

3300 Main Street, Houston, Texas
3300 Main Street, Houston, Texas

An awakening call came from John’s acknowledgement that the debt market has fallen off the cliff. According to his current experience, most banks have tightened their spigot, reducing their flow of debt capital; most of the debt being provided comes in the form of hybrid products. John believes that the industry has been trying to convert real estate into liquid assets with the expectation to make quick returns by churning their investments. According to him, the way to make money in real estate is by holding as asset long term, and treating like a bond where you cash flow is considered like clipping coupons.

In the future, AECOM Capital has a Europe fund, a PPP fund and Real Estate fund in its plan. We hope to host John again on the Cornell Campus. His perceptions of the market conditions and the incredible work of AECOM Capital enlightened, and stretched the thinking and teaching of Baker students’ current coursework.

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