SkyView Advisors Featured in HREI – Bringing a New Model to HRE
Featured Article: https://wolfmediausa.com/2024/08/06/companies-people-a-tech-firm-that-sells-real-estate/
By John B. Mugford
In 2014, the founders of Tampa, Fla.-based SkyView Advisors set out to change the way a firm went about brokering the sales of a small property-type niche in the commercial real estate (CRE) sector.
That niche was self-storage facilities, and those two long-time friends and entrepreneurs, Jay Crotty, the co-founder and CEO, and Ryan Clark, co-founder and chief revenue officer, built a CRE sales business focused on digital technology and developing talented people.
“Within our first three years of starting the company, we grew very, very rapidly in self-storage and, basically, taking the Amazon approach – which, at first, was to get really good at selling one thing, in their case books, before branching out into many things… – we were in the top three in terms of national market share in the self-storage space,” says Mr. Crotty, who started his CRE career with Marcus & Millichap Inc. (NYSE: MMI) before buying an electronic component business.
“We did so by building our own model, ripping it down to the studs and then rebuilding four, five different iterations of that, prior to selling anything other than self-storage.”
In recent years, SkyView Advisors has typically brokered the sales of between$500 million to $1 billion worth of self-storage facilities annually, with that number “trending up,” he adds.
Along the way, the firm added the brokerage sales of manufactured housing to its lineup of offerings, finding success in that asset class as well.
And now, starting about a year-and-a-half ago, the firm has entered the healthcare real estate (HRE) brokerage business, where it is looking to become as big of a player in the sector as it has become in self-storage.
In entering the HRE space, SkyView turned to a long-time, well-known sector professional as senior strategic advisor.
That individual is Robert J. King, who worked as an attorney early in his career in Canada before moving to Florida in the early 1990s and launching RJ King Associates Healthcare Real Estate in 1992. The firm focused on providing medical outpatient building (MOB) transaction, leasing and property management services.
During his career, Mr. King has completed more than $600 million worth of HRE transactions.
As the senior strategic advisor for Skyview’s HRE group, he “oversees the strategic planning, sourcing, due diligence, analytical functions and key client relationships.”
According to the firm, SkyView, whose big focus in the HRE sector comprises medical outpatient buildings (MOBs) and surgery centers, has brokered the sale of four healthcare facilities and currently has six deals on the market and 10 in the pipeline. “We continue to be selective in the assets we take to market given the challenging transaction environment,” notes Matt Hernberg, a digital marketing specialist with the firm.
An example of a deal SkyView arranged took place earlier this year, when the firm brokered the sale of three MOBs in the Lakeland-Winter Haven, Fla., area, which is about 35 miles east of Tampa. New York-based CoreGro acquired the 35,991 square foot portfolio for $10.5 million, or $297 per square foot (PSF). The seller was the tenant in the buildings, Trinity Medical Group.
HREI™ interviewed Messrs. Crotty and King recently to gain more insight into SkyView Advisors’ venture into the HRE sector. We discussed how the firm decided to enter the space, how it is doing, how Mr. King became involved, and other related topics. Their answers have, in some instances, been shortened for space purposes.
HREI: Let’s just start by talking about why SkyView Advisors got involved in the healthcare real estate space and what you think you can bring to the sector.
Crotty: We’re really excited about the opportunity we see in healthcare. As we’ve noted, we made it into the top three in national market share within three years of entering the self-storage brokerage business. Earlier in my career, I was a Marcus & Millichap guy, and was top performer there by the time I was in my mid-20s. And along the way I thought, “Hey, there’s a different way to do this business.”
I didn’t know at the time what that different way was exactly. But I felt like there had to be another way to do it, as when you look at the traditional brokerage model – and that includes the model used by the big publicly traded firms and all the way down to many privately-owned competitors of ours that have spun out of the traditional firms – there really has not been much innovation at all in that model. The business is done the same way today as it was 50, 60 or 70 years ago…
We’re in the midst of tremendous technological change and advancements in our society, right? We’re all living through this as we speak. The COVID-19 pandemic actually accelerated a lot of these trends, as suddenly it wasn’t weird to have video calls. Of course that’s just one example of these technological changes, and at the end of the day, we really feel like we’re in this tremendous moment in time and at SkyView we are taking advantage of these advancements.
HREI: Your firm is heavily focused on using technology. Can you explain this a bit more?
Crotty: Sure. We like to point out that our competitive advantage is that we are a technology company first and foremost. We’re a technology company that chooses to sell real estate. We did not think of ourselves first and foremost as a broker, certainly not in the traditional sense, and remember, those businesses were started in the 1950s, ‘60s and ‘70s, when you didn’t have all this technology.
We are a modernly constructed company that’s built around technology and as far as how we will compete, you know, we go head-to-head every day in self-storage against the same brokerage firms we compete against in healthcare … though we are not quite there yet in healthcare. We have a lot of work to do, but we’ve done it in storage and we feel like the recipe is the same…
What we do is have a very detailed conversation with the client, where there are lots of questions. This is a huge decision for these sellers … and it’s a responsibility we take very, very, very seriously. It’s a tremendous responsibility.
I would say that the first thing we do is to take the time to really understand our client, which also includes ultimately understanding their goals. Every client has their own unique objectives. That’s the first step in our process, which is to take the time to do that. Our website (skyviewadvisors.com) includes a lot of this information and details about the process that we go through.
Our revolutionary new model is also the most salesperson-centric platform in the industry, ensuring elite execution on every transaction through our proprietary 252-point process and modern technology-based platform. We like to say that SkyView harnesses technology to create efficiency in everything we do, leading to a more frictionless experience and delivering better results for clients.
HREI: Okay, so the first question for Bob is: Why would you give up owning your own 30-year-old firm to join another firm and start a new platform from scratch?
King: I do get asked that question a lot. And the answer is pretty simple. I was so impressed by two things with SkyView Advisors. The first was the traction the firm gained, beginning in self-storage, the market share they gained in that sector and the short time they did it in. And second, I was impressed by how they’ve broken the business down into a more technological and rationalized platform.
As Jay said, there’s not much new under the sun that I’ve seen in the brokerage business in my 30 years of being involved in it. That probably goes back long before I entered the space. But what SkyView Advisors has done is, as Jay said, tore down the process to the studs and rebuilt it, and they actually went in and analyzed what has to happen for a successful transaction to take place. It’s not just a few bullet points on a sheet of paper. It’s actually a step-by-step process consisting of thousands of steps that have to be undertaken in every transaction no matter how large or how small it is. That impressed me so much, and that is coupled with the company’s world-class training materials. The way the company trains new associates is off the charts. There’s nothing in the industry that I’ve ever seen that can compare to it.
Those are the things that convinced me to fold up my own tent and build this platform with them.
HREI: It seems like you entered the healthcare market at a difficult time, as everyone involved knows that high interest rates and harder-to-obtain debt have slowed sales down considerably from just a couple of years ago. How’s it gone for SkyView and how do things look for the more immediate future?
King: We’ve done a number of transactions, but, as you mentioned, the transaction market has been slowed by the financing market. The availability of debt has been a real challenge, obviously, and we’ve seen the effects of that in the fact that we’ve taken quite a number of properties to market that did not trade. We got caught in that wheelhouse just like every other brokerage in the space, if not every other brokerage in all of commercial real estate.
But, we currently have a very robust pipeline and we’re starting to see things loosen up and we’re very encouraged by that. Not any dramatic shifts, just a gradual loosening of some of the credit requirements, the level of coverage, the loan-to-value ratios – just marginally, but still, it’s trending in the right direction. We’re encouraged by the market.
HREI: Well, it sounds like technology is a big part of what you offer your clients. What about the personal relationship side of the business? Does it still play a big role in how you conduct business?
King: Absolutely. What makes this sector one of the great spaces to work in is that it’s a pretty small pond. Sure, it’s a pond that has grown quite a bit, but relative to other asset classes, it’s still very small. I’ve always liked that about healthcare because accountability plays a big role in the job you do and whether you get additional business. In some of the larger asset classes, you could perhaps do somebody wrong and move on to the next group of investors. But in healthcare, where everyone knows everyone, it’s very different. You have to pay attention to the ethics side of the business because it is such a small club. I’ve always prided myself on doing that, and we certainly adhere to that here at SkyView.
Crotty: Because healthcare is a smaller niche market and is similar to storage in that regard, it also creates tremendous opportunity if you do what you say you’re going to do and you treat people the right way, the ethical way. I was raised in Cleveland, Ohio, so, you know, I was raised with those Midwest values.
It also goes beyond that. If you do what you say you’re going to do, and you treat people the right way, then they’re going to engage with you on the next deal. Or, if you’ve done right by them in the past and you call them on the phone and tell them they might want to look at a certain deal, they’re probably going to drop what they’re doing and look at it.
Bob has certainly earned that kind of respect from his 35-plus years in the market, and that was extremely important as we made the decision to move into this space. Bob and I both wanted to take the time to get to know each other on a human level, and to make sure this was what we wanted to do together in a business sense. And we decided that, yes, we had those same values about how we prefer to go about doing business. It’s been a great relationship and I’m so glad we’ve made this move.
HREI: Can you talk a bit about the thought process that went into SkyView moving into the HRE sector? Had you been thinking about it for a while and what were the deciding factors?
Crotty: Well, as I looked at it and began studying the idea of starting a concentration in healthcare. Bob was a big part of the final decision – as a result of the conversations he and I had prior to launching the healthcare business.
I came to the realization that there were a lot of similarities between self-storage and healthcare. And those similarities gave me, as an entrepreneur and someone who likes being kind of a risk-taker, the comfort to look at this and realize that while it is indeed different than self-storage, it’s not that different. We love the fact that healthcare is an asset class where long-term demand drivers are very favorable when you look at the aging of baby boomers, the cost of healthcare and country’s current and future spending on healthcare.
The more Bob taught me about healthcare, which, as part of my job as CEO is to get the right people in the right place and surround myself with people who help me fill in the gaps of my knowledge and help me recognize that I don’t know everything.
Bob helped me understand that the barriers to entry in healthcare real estate are significant, too. We like that, as we want to be involved in an asset class where our dedication pays off. We’re in this for the long haul and did not come into it with the idea of trying to get rich overnight.
We are creators of businesses. That’s what my partner, Ryan Clark, and I do. Ryan’s the chief revenue officer, and we wear different hats in the business. But we both recognize that it takes time to build a business and if you do it the right way, clients will come back to you time and time again.
HREI: Are there other aspects of the healthcare real estate space where you think you can help clients?
Crotty: Well, one of the big things that’s attractive about healthcare, and which is much like the storage industry, is that the ownership is quite fragmented, and it’s that private ownership profile where they need help.
In the storage sector, there was a tremendous hunger and appetite for help. They’d say, “I’ve owned this asset for 20 years and I have groups approaching me directly. One group offers me $10 million, and another says they’ll pay me $15 million. I talked to a broker and they tell me it’s worth $7 million, while another broker tells me it’s worth $20 million.”
They need reliable, professional advice and they need people who are on their side and that are representing their best interests. That’s exactly what we’ve always done in storage, and we had tremendous success quickly.
So, we’re coming at the healthcare market in the same way, where we can really offer help to that middle market, that private ownership profile, the physician groups, investor groups that got together and bought an MOB 15 years ago and they’re sitting on $15 million of equity and they’re hearing different things from different people. We see this as an opportunity for us to give them the straightforward advice and guidance. It’s what really has me excited as an entrepreneur.
King: I agree with everything Jay said. And I would add that what’s also interesting is what has happened with the institutionalization of the two asset classes — self-storage and healthcare – is very similar. Not that I’ve ever operated in self-storage, but I know this story very well now, and there’s a lot of similarities in the sectors.
HREI. Can you talk a bit more about the Skyview 252 and its purpose?
Crotty: Of course. The genesis of why we created the 252 is that … we want to be able to hold ourselves to the standards that the best companies in the world do, and that involves delivering consistent customer service and an experience for them that they can count on. We certainly use technology to do so, but we also still rely on people within Skyview to deliver that, and obviously Bob has his own unique personality compared to say someone else on our team. But at the end of the day, we will be able to commit and say we deliver a consistent experience and it’s also a huge competitive advantage because as we gather feedback from clients, which we do extensively as part of this process … we can and will make necessary changes and immediately roll those out across hundreds of transactions that are happening across all asset classes. We consider that to be a big competitive advantage, and it becomes even more of an advantage with scale.
HREI: Going back perhaps prior to moving into the HRE sector, how did you two meet? Is there a good story behind that?
King: We’re actually not sure, as we’ve talked about it before. We really don’t know specifically when it happened, even though we’re both residents of Tampa, which is an easy part of the equation, and the fact is that we knew of each other before we met.
Crotty: So, I knew Bob’s name before I even met him … I knew his name from the healthcare real estate space. I would drive around and I would see his name on signs at various properties. And then when we did meet, which I would say was about 15 years ago, whether it was at a business networking event or a social event – it could’ve been at Gasparilla (Pirate Fest), which is like Tampa’s Maris Gras celebration.
But then we reconnected really during COVID-19, and we started having conversations over video and Zoom calls and we just were talking about the possibility of moving into healthcare and the idea of Bob joining us, which obviously led us to where we are today. I wish we had a better story of how we met, but we don’t, even though it all worked out very well.
