Admiral Capital Group has steered a steady course through growth while expanding its offerings and maintaining the firm’s identity as a socially-focused community investor.
San Antonio-based Admiral continues to prove itself to institutional investors as it gears up to launch its third value-add real estate fund, which Co-Founder and Managing Partner Daniel Bassichis believes “should be a much more institutional looking fund. We’ll have 10 years of history, lots of exits and an established team and track record.”
The firm began to gain significant traction through the family office and high-net-worth space that allowed for faster scaling, said Bassichis, adding that those investors are “really where you’re building those big one-on-one trusted relationships.”
Bassichis, who founded the firm with basketball Hall of Famer David Robinson, believes it takes a long time to make headway with institutional investors, but highlighted his specific gratitude for the $153 billion Teacher Retirement System of Texas, which made an initial $15 million commitment to the firm in 2012 and followed up with a $20 million commitment in 2016 (EMM, 9/7/16; 3/7/12).
The firm is in the process of finishing its second fund, which is comprised of six acquisitions and needs “three to four more to close out the fund,” Bassichis said. The firm’s first value-add fund has now sold 10 of its 11 acquisitions, with the eleventh currently in the market.
The first and second funds closed at around $113 million and $124 million, respectively, and included assets in the $20 million to $50 million range and equity checks of about $7 million to $17 million per deal, Bassichis said.
“As the [third] fund grows in equity we will focus more on the upper end of our deal size range,” Bassichis said of the yet-to-be launched third value-add fund. “The target would likely be 11 to 14 deals requiring $15 million to $20 million checks.”
While the firm has seen success in its value-add funds, it has grown to roughly $1.6 billion in assets under management by leveraging its expertise in the markets and not limiting itself to single pooled funds.
The firm now has a growing portfolio of private equity investments taking ownership stakes in sports, hospitality and entertainment businesses, Bassichis said. One example is Admiral’s co-founding role and investment in the Fitler Club, a 100,000 square foot social and fitness club that includes co-working space, opening in March in Philadelphia and then expanding to other markets.
“We have a broad group of investors with varying needs with respect to hold period, cash yield, risk, etc. which uniquely positions us to pursue opportunities where we believe the return is attractive for the given risk,” Bassichis said. “It’s allowed us to grow at a faster pace due to our ability to capitalize on a wider range of opportunities.”
The firm has investors including USAA Real Estate, which helped the firm off the ground, as well as public pensions, university endowments, foundations, family offices, wealth management firms and highnet-worth individuals, said Bassichis, who added that Admiral is unique in that it also has a growing group of professional athlete investors, especially in the sports and hospitality investments.
“We were nimble and continuously diversified our investor base and were opportunistic when we saw ways to expand our core competencies,” Bassichis said, noting the firm has launched a dedicated core-plus platform after identifying attractive yields in select markets for stabilized office buildings with diversified, long-term leases in place.
Through its success in the value-add funds and its relationships with family office and high-net-worth investors, Admiral has been able to cultivate a client list of long-range investors with various investment appetites ranging from long-term holds with steady cash flow to shorter-term with higher returns, Bassichis said.
“Given our unique investor base, we are able to approach deals in many different ways, which makes us a unique and attractive capital partner,” he said.
Principal Andy Stone heads the firm’s dedicated core-plus platform out of its Dallas office, rejoining Admiral to launch the program, Basicchis said, noting that Stone had been the firm’s first employee.
“We have developed the expertise to properly analyze risk and determine the appropriate return for that risk,” Bassichis added. “With respect to the newly-launched core-plus platform, we believed the strategy provided an attractive risk-adjusted return and efficiently leveraged our existing team and presence in those markets.”
Moving forward, the firm has continued its focus on the top 25 domestic markets, but is beginning to spend more time outside of the top five and into those secondary markets, Bassichis said, with a predominant focus continuing to be on the multi-family and office space sectors with some limited retail interest as well.
Bassichis believes the firm’s value-add and core-plus endeavors should be able to close eight to 10 deals per year in the $25 million to $75 million range while continuing to grow its team.
The firm has not forgotten about its mission to make an impact in the community through its early success, said Bassichis, noting that Admiral donates 10% of firm profits to support low-income communities and education, building on Robinson’s decades of philanthropic work.
The firm’s mission has also naturally positioned it to pursue opportunity zone investments, including a partnership with Texas-focused platform Blueprint Local. Admiral has also added David Robinson, Jr. to expand its platform in direct impact investments as well as scaling philanthropic work in cities where the firm invests.
The firm has also built a select group of about 25 current and retired professional athletes that have a strong interest in investing and community impact, some of whom have done internships at Admiral to get further exposure to the investments. Many of the athletes view David Robinson as a role model for impacting his community, career transition and being a part of a profitable investment firm.
“The whole mission of our business is to make an impact and not just [be] a traditional real estate or private equity business,” Bassichis said. “Now that we have executed on the business front, we are highly focused on scaling up our impact during the next phase of growth.”