Mar 25, 2015 Lawlor Builds an Institutional Platform for High Net-Worth Investors

In just a few years, Scott Lawlor has built a company that controls more than 12,000 units. To get there, he's mixed an institutional platform with high-net worth equity and a contrarian investment strategy.

By Les Shaver

If Scott Lawlor looks like he's in a hurry, it's probably because he is.

As CEO of Waypoint Residential, Lawlor is in constant motion—always meeting people and explaining his four-year old firm's story. "I'm flying around the country and the world to meet with investors and do presentations," says Lawlor, who's also a co-chairman of the Greenwich, Conn.-based Waypoint (not to be confused with the Bay Area single-family rental firm of a similar name). "It's a very slow process that is time consuming and labor intensive and expensive. There's no magic."

Lawlor's business strategy is simple and in, today's institutional world, may even be considered old fashioned. He pools money from high net-worth individuals—about 450 in all from the U.S. and half a dozen other countries in all—and buys apartments. But there's an institutional twist. He has a 20-person support team located in Greenwich, Conn., to service these wealthy investors.

"We're here to be an institutional-caliber provider to the high net-worth family office wealth managers," Lawlor says. "I thought there was a void [servicing high-net worth investors] and that represented a tremendous business opportunity. So that's what we're doing."

Growth Story

Lawlor has been in commercial real estate for 29 years, serving as everything from a broker to an asset manager. From 2000 to 2007, he bought more than 28 million square feet of commercial properties, as the founder of Broadway Real Estate Partners, a vertically integrated real estate investment management firm.

After the 2008 crash, he, like a lot of others, saw a safe haven in apartments. But, unlike a lot of people, he was attracted to apartments for what didn't drive their performance.

"In our view, multifamily, out of all of the mainstream property types, has the best macro-level thesis with respect to structural tailwinds," Lawlor says. "Apartments, as far as we can tell, are the only property with meaningful structural tailwinds that have nothing to do with next quarter's GDP growth. Whether it's a shift in homeownership patterns in the U.S. or the demographic wave coming through the pipeline, there are half a dozen bullet points driving apartment demand that have nothing to do with next quarter's GDP."

In four years, Waypoint has invested $1 billion across 37 investments. It also has a third-party management platform with a portfolio of about 12,000 units across the Sun Belt. Lawlor has a team of 60 associates spread across four offices—in Greenwich, Boca Raton, Fla., Dallas, and Atlanta.

Lawlor says most of his investors are repeat customers. Though he has produced IRR's in excess of 30%, he employs a conservative structure with LTV's around 60% for a hold time of 7 to 10 years.

"We have a very conservative view of leverage," Lawlor says. "Investors want security and we have long-term, fixed rate debt in order to generate nice, reliable coupons to our investors."

In the frothy apartment market, Lawlor has managed to find deals by looking at places the big institutions might avoid. While the company invests in markets like Atlanta, South Florida, and Houston, it will also go to locales like Augusta, Chattanooga, and Greenville, S.C. And it will go to less popular submarkets like Key West, Fla., and South Atlanta.

"In larger markets, we're willing to think about submarkets that most people won't touch," Lawlor says. "We're just looking for growth and diversification. We don't like one-trick pony markets. We like markets with good potential for growth going forward."

While Lawlor acknowledges issues like asset bubbles and oversupply going forward, he sounds like he's found a haven in multifamily that will allow him to weather any turbulence.

"With new supply, you see it coming from a mile away and it tends to congregate," he says. "So as long as my biggest threat barrier is something that's easily identifiable and tends to congregate in certain areas, I can get out ahead of deliveries. With structural tailwinds on the demand side and easily knowable deliveries on the supply side, it [multifamily] feels like a pretty good balancing of the scales to me."

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