Be Careful What You Wish For! Ah… I can’t wait to retire…. no stress, deadlines, anxiety…. just my free time and no commitments… work out more…. play a lot of golf… travel with my wife… see the grandkids…. enjoy the “twilight years” …fruits of success…. slow down…. have a biz card that says “Closed for Business” … with “No Name”, “No Number” and “No Interest” stenciled in big bold black letters… check out! What triggered this thought was a recent “over the fence” conversation with my neighbor, who works for a tech company here in Silicon Valley. He expressed excitement, and a bit of concern over turning 50, and wondering what life would be like for him once he retires in a couple of years. Considering that I have more than a decade on “Mike”, the conversation seemed like some weird time warp to a distant past when people worked for the same company their entire life and retired with a pension, pen and gold watch, and an unobstructed view of the sun setting on their career. A sobering sight, no doubt. At least for me.
How did we live without Facebook?: The US currently has multiple living generations ranging from the Greatest Generation‐Seniors, Baby Boomers, Generation X, Generation Y‐Millennials and Generation Z. Delineating the differences between these distinct social generations is widely used in popular culture and marketing. It is particularly relevant in our business of developing retail properties and ensuring that our tenant mix, merchandising plan and overall curating for an experience which fully embraces these generations’ habits, buying power and technological prowess. Particularly Gen Y: Millennials, or America’s youth born between 1982 and 2000, now number 83.1 million and represent more than one quarter of the nation’s population. Their size exceeds that of the 75.4 million baby boomers, according to the most recent U.S. Census Bureau. Overall, millennials are more diverse than the generations that preceded them, with 44.2 percent being part of a minority race or ethnic group. Just Thank Mom & Dad: In terms of wealth generation, Baby Boomers will bequeath over the next 30 years, an epic $30 trillion to Generation X and Millennials. On the flip side of the wealth metric, the Government Accountability Office analysis found that that average Americans between the ages of 55 and 64 have accrued about $104,000 in retirement savings. Sound like a lot? Not when you realize that sum would translate into a $310 monthly payment if your money were invested in a lifetime annuity. Unfortunately, the average sixty‐something has an estimated median savings of $172,000 in the bank. Not nearly enough. At this point it’s hard for many of Americans contemplating retirement to save enough to make up for the shortfall; which explains why my 72‐year‐old brother and 74‐year‐old sister‐in‐law continue to work hard every day.
Is It Time for Botox?: So, I got to thinking, that after 37 plus years of laboring away in commercial real estate, the idea of “transitioning” to retirement may have a big appeal to some. My head is spinning as I watch father‐time physically and mentally transform many of my early investors, members of the Greatest Generation, Baby Boomer parents‐my parents’ generation. I still have many fantastic early and now “senior” investors who were in their 50’s and 60’s when we first met on one of DJM’s initial investments. I launched my first real estate acquisition with private equity, with prime at 21.5%, mortgage debt at 15%, and 14.5% inflation; I marvel at how we ever bought anything. Nobody really expected any cash flow, just big deductions, and cocktails at lunch was a given. Today, that group of early‐adopters are in their late 80’s and 90’s, and primarily interested in cash flow and not so keen on long term investments, for obvious reasons. The crazy thing is that I am their age today when they began investing with DJM. Some people put aging and wine as a pairing that yields delight…we all assume we get better at certain things over time. Perhaps, nonetheless, experience is priceless, but only valued if put to good use, regardless of one’s age. I’d like to think that Lindsay, Eric and I are better real estate investors/developers/managers today than 15 years ago‐maybe its elderly wisdom? In 2002, DJM had one asset and 5 employees; in 2016, DJM manages over $1.2 billion with roughly 45 employees; plus, 1.06% inflation, cheap debt and a generation that has created massive amounts of liquidity and wealth. The three of us may be losing our youthful looks, but our performance sure makes DJM look pretty attractive to all ages of our investor pool. Spoiler Alert‐ I’m not retiring nor plan to for a very long time.
My, How Time Flies!: Over the past two decades, DJM Capital Partners has continued to mature, improve its leasing, marketing, property and asset management’s effectiveness and efficiency as a constant of change. Over the years, DJM has transitioned from an apartment and office asset class investor to a multi‐tenant “relevant” retail and single tenant investor/developer, as represented by the DJM Net Lease Fund. We closed the Fund October 1st; this initiative has been very successful from an asset class “aggregation” and strategy perspective. The Fund is generating an average 8% plus annual return, with 50% leverage on a total private capital pool of roughly $48.3 million, total Fund size of approximately $95 million. The Funds initial closing was June 15, 2015, with approximately 5 subsequent closing, and has paid a consistent monthly dividend, totaling $3.5 million over 15 months. As part of the evolution of the company, and the investment potential and our early success in the net lease space, DJM is currently negotiating an institutional Net Lease Fund II. I’ll keep you posted on our progress.
DJM Capital Partners, Inc.
D. John Miller, Founder & CEO