DSS Wrap Up: Steve Benjamin of Stromiga
On Thursday, April 27th, the Baker Program in Real Estate welcomed Steve Benjamin of Stromiga Real Estate Development, to speak at the weekly Distinguished Speaker Series. Mr. Benjamin has an entrepreneurial mind and spoke on a variety of topics that sparked student’s interest. This includes talks on the developments he has done in Western Canada, as well as lessons he has learned in his years that he felt would benefit upcoming real estate professionals.
Mr. Benjamin began his talk by talking about his background, and his path into getting into real estate. He earned his Bachelors, a Master’s in Engineering, and a MBA from Cornell in a six-year span, a testament to his dedication to education. But he has always had entrepreneurial tendencies, which led him down the path of real estate. From a young age, he and his partners would buy warehouses that he felt were too cheap compared to the warehouses that were selling in neighboring cities. As he began making money on those endeavors, he put more and time and energy into the real estate world. This led to the formation of Stromiga.
After talking about his past, Mr. Benjamin then began talking about some of his views on real estate. He prefaced his talk by mentioning that he would be talking from the point of view of an entrepreneur, as that is what his experiences have been in. The first topic he addressed is the age-old question of, “Why Real Estate?” He then laid out many reasons why he felt the industry was great. In real estate, you can maintain control of a property, earn tax incentives, create value, and can be successful simply from market information being choppy. One example he gave came from a purchase he made in Saskatchewan, Canada. “Why would I buy something in Saskachewan, Canada? Well, we believe there is an opportunity from there being a lack of market information…now if you are going to buy a high-rise office building in New York city, that may make it harder to uncover new information, because most of it has already been out there.”
Mr. Benjamin then laid out two rules he found key in succeeding in real estate: “Never Have to Sell” and “Know Your Market”. Never having to sell, according to Mr. Benjamin, means minimize your leverage. To the surprise of many students, he mentioned that Stromiga has only around a 25% loan-to value ratio. This allows him to be the one who calls the shot on the projects, and weather out any storms that may arise. Knowing your market is also a very key aspect for entrepreneurs. This includes having a strong grip on the construction aspects of your local market, as well as what kind of product types are truly needed.
He then dived into his case studies, starting with a high-rise building in Edmonton. His talk on the project was interactive with students, and he would ask questions such as “how would you value this property?” and “what kind of rents and occupancy should I expect?” Students would make guesses as to the property, and he would provide his insight and feedback to their guesses. For example, many students projected rent growth in his rental rates, but Mr. Benjamin pointed out there had been none in the Edmonton downtown market for years. Overall, students were fascinated to find out how the property went up in value for years after his renovations, only to drop sharply in value due to the value of oil dropping.
After the topic of downtown office space, Mr. Benjamin moved on to a redevelopment he had in Regina, Saskatchewan called Rochdale Crossing. After learning about the market, students then learned of the history of the property and the challenges it faced. The property had many unattractive features including a poorly designed mall concept and vacancies. By re-envisioning the land, Mr. Benjamin redeveloped it to an attractive area that had a new site plan. Many new, high credit tenants, such as the Royal Bank of Canada, were brought into help stabilize, which is often difficult for smaller developers to secure. But Mr. Benjamin pointed out that “I had no relationships, I’m just a small developer. I had a good piece of property, in a great location, and that’s what drew them in.”
Mr. Benjamin provided many insights and viewpoints to the students, making it both interactive and informational. For many, this was the first exposure they had to an entrepreneurial way of approaching and valuing real estate. The students and faculty of the Baker Program in Real Estate thank Mr. Benjamin for visiting the program and appreciate the years of insight he provided to students.