HomePrivate WealthArticlesTurmoil Or Opportunity In The Real Estate Markets?

Turmoil Or Opportunity In The Real Estate Markets?

Richard Stockton is a senior managing director of Ashford Inc and fund manager for the Texas Strategic Growth Fund.

Previously, Stockton worked as global co-head and chief operating officer for the $1Bn real estate business of CarVal, a division of Cargill. He also was chief executive officer of the Americas for OUE Limited, a publicly listed Singaporean real estate development company. Previously, he was a managing director at Morgan Stanley for 16 years, including serving as the head of real estate banking for their investment banking business in Asia and the EMEA (Europe, Middle East and Africa). He is a dual citizen of the United States and the United Kingdom. He received a B.S. from the Hotel School at Cornell University in 1992 and an MBA from The Wharton School at the University of Pennsylvania in 1997.

Russ Alan Prince: Who is Ashford Inc?

Richard Stockton: Ashford Inc. is an alternative asset management company with a portfolio of strategic operating businesses that provides products and services primarily to clients in the real estate and hospitality industries. Ashford is fully vertically integrated and provides (i) advisory services; (ii) asset management services; (iii) hotel management services; (iv) design and construction services; (v) event technology and creative communications solutions; (vi) mobile room keys and keyless entry solutions; (vii) watersports activities and other travel, concierge, and transportation services; (viii) hypoallergenic premium room products and services; (ix) debt placement and related services; (x) real estate advisory and brokerage services; and (xi) wholesaler, dealer manager and other broker-dealer services.

Ashford’s advised platforms include two publicly listed REITs, Ashford Hospitality Trust Inc. (NYSE: AHT) and Braemar Hotels & Resorts Inc. (NYSE: BHR). Ashford also advises a private partnership, the Texas Strategic Growth Fund (“TSGF”). The two REITs invest exclusively in hotel properties, whereas TSGF invests across all property types within the state of Texas. Ashford is publicly traded on the NYSE American LLC (“NYSE American”) under the AINC ticker.

Prince: What do you do there?

Stockton: I manage the Texas Strategic Growth Fund, including determining overall strategy and portfolio composition and identifying and executing acquisitions. We have three primary strategies: repositioning, conversion, and development. For repositioning deals, we will take a Class B apartment complex and upgrade it to Class A. We will change the use for conversion deals, such as converting an office building to a multifamily or hotel. Lastly, the development opportunities we target might involve ground-up construction of self-storage, multifamily apartment complexes, and retail.

Prince: What is the biggest investment opportunity you are seeing today?

Stockton: We formed the TSGF to capitalize on the mass migration trends we see with people, wealth, and corporations relocating to Texas. Texas is already the ninth largest economy in the world versus entire countries. But especially in the last few years, we have seen a dramatic uptick in job creation and population as people flock to Texas for its superior business climate, lower taxation and more favorable weather than the northern coastal cities, in particular. 

Texas also boasts a robust infrastructure that includes 26 commercial airports, 19 seaports and 11 interstate highways. As a result, Texas has led the country in GDP growth and job creation over the last several quarters and is on track to continue to post strong gains. 

In recent years, these jobs have been fueled by a number of high-profile headquarters relocations by major employers, including Tesla, CBRE, JP Morgan, Charles Schwab, Oracle, Hewlett Packard and others. Importantly, one of the main economic segments benefiting from this demographic shift is the real estate sector, where rents and values have steadily risen, with particular emphasis on multifamily, self-storage, and industrial property types.

Prince: Which clients are best suited for this type of opportunity?

Stockton: Individual investors and family offices with a longer-term time horizon, who don’t necessarily like the volatility of the public markets, are perfect for opportunistic or value-added real estate investing. Typically, these types of investments have a five-year or longer duration and generate returns as capital gains much more so than income. Returns also tend to have a low correlation to equity markets and serve as a useful diversification tool.

Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.


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