Writer: Max Crampton-Thomas
2 min read April 2021 — Hamptons Group is an alternative investment and advisory firm headquartered in Miami with offices in New York. In an interview with Invest:, Hamptons Group chairman and managing director Jeff Bartel discussed his firm’s business thesis, investments and advisory strategies, and how the firm successfully managed the COVID pandemic. Bartel also talked about the impact of federal, state, and local public policy and the variables facing some segments of the real estate market.
In what areas does Hamptons Group excel?
We began a decade ago with a vision to create a unique niche in the alternative investment and strategic advisory space, using top, diverse talent, expertise, and agile resources to deliver outstanding returns and solutions and build lasting value for businesses, partners, and clients locally, nationally, and globally. Long-term value creation is at the core of our mission. We invest in people, places, projects, and positions, and we work to make them better. Hamptons Group has three business segments. Our private capital segment focuses on private equity, venture and growth capital, credit, and impact investing across multiple sectors, industries, and geographies focused primarily on small and middle-market companies. Our real estate segment focuses on value-add and opportunistic investments in real property, as well as real estate finance, asset management, and ancillary brokerage and land entitlement services. We are not developers, but we often partner with developers and development groups. Our third segment is strategic advisory. Our strategic advisory segment focuses on consultancy assisting organizations across the private, public, and social sectors to solve high-impact internal and external issues, projects, and strategic matters. These include corporate strategy and growth, leadership and management performance, business development and market strategy, public affairs and issue management, land use and real estate development consultancy, government and regulatory strategy, and alternative energy, utilities, and infrastructure initiatives. Hamptons Group makes investments consistent with social responsibility, sustainability and environmental stewardship, corporate best practices, good government and public integrity, and ethical investment principles.
How did the Hamptons Group capitalize on the volatility of the markets during COVID?
The two throttles for companies like ours are the deployment of capital and access to capital. Deployment of capital is one thing but having true access to capital means that you either need to be cash-rich or can obtain financing with asset leverage. We were fortunate in the way that we operate in that, as much as possible, we have a balance sheet that allows us to invest and take advantage of opportunities with high bias to action and agility. Like any good company, we make opportunities and find advantage whether the market is bearish or bullish, whether real estate markets are in a downturn or an upturn. When COVID hit, it was a shock to the entire social and commercial systems. What we did was look for opportunities to invest anew in certain real estate areas that we knew were going to bounce back in the near to medium term or in sectors that we knew were going to continue to thrive. For example, logistics and warehousing inventory related to online deliveries is an area that was beginning to thrive pre-COVID, but now it is very much thriving and will continue to do so. We did make some adjustments concerning real estate priorities, particular with projects that were in the pipeline in certain commercial types such as mixed use and retail. Like any firm exposed to a high level of office or retail assets, some systemic changes have been taking place.
How have government policies impacted your investment strategy?
Our strategy has not changed but our tactics for deployment have had to be more nimble and more forward-thinking. In that regard, 2020 was not just a dramatic year because of COVID. It provided good, strong signals the Fed will do what it could to help backstop the economy. Throughout 2020, we saw strong monetary policy from the Fed — they acted very quickly after COVID to bring interest rates down to essentially zero. That gave a tremendous amount of confidence to the financial sector. We did not see that with respect to other policies coming out of Washington. However, now what we are going to see is a continuation of robust, activist monetary policy by the Fed and the Treasury, but we will also be seeing predictable fiscal policy coming out of the White House, including in traditional infrastructure, modern infrastructure, energy, and transportation. At the end of the day, for better or worse, what businesses really want from government is predictability. We all want to know what the tax structure is going to look like, what the fiscal structure is going to look like, and what the monetary structure is going to look like. If companies can do that, they can plan effectively and efficiently. At the state level, in Florida, we will continue to see a low-tax, pro-business climate. At the local level in South Florida, economic recovery and encouraging new businesses to come to the area and helping existing large companies expand are front and center as well for public officials. In the coming months, I think we are going to see more predictability in federal tax, monetary and fiscal policy, and an extraordinarily strong, commercially supportive, and business expansive state and local government approach as well.
How would you summarize the landscape for retail real estate?
In general, real estate as an asset will continue to do well. The question becomes what property types and locations will do notably well. High-end residential and single-family residential and construction will continue to do very well, especially in markets like South Florida that continue to attract more people with wealth wanting to move here. Industrial, like warehouses, is doing and will continue doing remarkably well. Hospitality will bounce back as well, as Darwinian circumstances will prevail with the strongest, “fittest” restaurants and hotels having survived the pandemic and will soon thrive when the economy fully opens. We are seeing the same thing in retail that has survived the pandemic, as prospective shoppers and customers want to get out and be social again. That said, the two areas that have the greatest unpredictability, which are the most variable right now, are class-B office and retail properties. Many of these properties may have to retool to survive. They may become fulfillment centers for digital enterprise, or they may have to retrofit to change their uses. Also, the use of office space is changing due to remote work, accelerated by the pandemic. In South Florida, although we will certainly see firms and businesses potentially growing their leaseholds due to a strong commercial market, new firms, and expansion of companies, the leased square footage per capita of employee will go down, as more back-office personnel are offered or choose to work remotely and more professionals like lawyers, accountants, and others do more hoteling use of office space. Without a doubt, the entire nature of the office–what and where is your workplace–is changing.
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