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On the evening of October 20th, 2016, the Baker Program in Real Estate hosted Aref H. Lahham of Orion Capital Managers for the weekly Distinguished Speaker Series. Aref was the first internationally based speaker to attend the event this semester. Headquartered in London, Orion Capital Partners has offices and develops in all major European markets. The focus of Aref’s lecture consisted of: Orion Capital Partners’ organizational focus, thoughts of Europe’s real estate in a post- Brexit atmosphere, and case studies of transformational projects undertaken by Orion .
Focusing on his firm, Orion Capital Partners, Aref described the strategy underlying most of the due diligence on deals, minimizing risks. “Over eighty percent of my time”, Aref said, “is spent exclusively on stress testing the deal”. The company also buys insurance for anything that they can, including interest rate swaps and a hedge on currency risks. The conservative mindset also led the company into liquidating large portions of their assets prior to the market crash in 2007 and Brexit.
Aref transitioned his lecture to the European market before and after Brexit. Prior to the current political turmoil, Aref saw Europe heading in a positive direction, facilitated by quantitative easing policies first undertaken by the US Federal Reserve. This had led to a strong market recovery in these past few years. In terms of real estate, the lower interest rates offered by governments has incentivized investors to move their funds into higher performing real estate, rather than receiving minimal returns offered through banks and government bonds. Over the past few quarters, Europe has seen a trend of many properties being listed for sale. “This is great for Orion,” Aref pointed out, “because it lets us come in a choose the assets we like”. By being disciplined and sticking to their fundamentals, Orion successfully is navigating its way through the current market.
Aref finished his lecture detailing three case studies of deals Orion had successfully completed, including two shopping malls and a luxury multifamily development. His first deal, Zaragosa, is a shopping center located between Barcelona and Madrid. The second acquisition Aref presented was Qwartz, a shopping mall north of Paris, France. In both presentations, he emphasized how important architecture was to the success of the properties. “Malls are headed towards becoming entertainment spaces,” he pointed out. Students viewed videos showing transformations of both shopping centers into entertainment centers with lakes, movie theaters, and even birthday party centers for the kids.
The final case study was a luxury apartment development in London. Aref first quip about the deal was that “the city of London is where you make or you lose the most money in real estate”. The multifamily development he presented initially had poor design and architecture. Orion purchased it and ran an architecture competition, with the final design being sleek and luxurious. Once again, Aref chose design over profits, even adding a sleek club area instead of two apartments.
The Baker students were thrilled to hear Aref’s discussion on the wide array of topics. “It was great to have an international guest at DSS,” says Mark Hughes, first year Baker student. “The world is becoming more and more globalized, and it’s important to hear from someone with a more global perspective”.