Real Estate with CenterCap Group Co-Founder Deborah Smith

Real estate continues to be one of the world’s biggest and most thriving industries today. But what is real estate? What’s happening now in the market? What’s the best way to buy and sell?

In this episode, Deborah Smith shares her experience and gives us insights on how to understand and thrive in the market!

Deborah is the Co-founder and CEO of the CenterCap Group, a certified women-owned business and boutique real estate investment bank that provides strategic advisory, capital raising, equity research, financial modeling, and consulting-related services to private and public sector companies and fund managers in the real estate industry. Tune in and pick up gold nuggets about all things real estate!

Check out the full series of “Career Sessions, Career Lessons” podcasts.

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All Things Real Estate, With CenterCap Group Co-Founder And CEO Deborah Smith

On Her Journey From A Dairy Farm In Australia To The World Of Real Estate Investing

In this episode, my guest is Deborah Smith, who is the Cofounder and CEO of The CenterCap Group, a certified women-owned business and boutique investment bank based in Stamford, Connecticut that is focused on all things real estate. CenterCap provides strategic advisory, capital raising, and consulting-related services to private and public sector companies and fund managers in the real estate industry.

Deborah has worked in financial services with a focus on M&A and real estate investing for more than two decades. With past roles at Morgan Stanley, Wachovia, Lehman, and CBRE, she branched out on her own in 2009.

Apart from her work at CenterCap, Deborah is a board member at Aimco, the apartment investment and management company. It is a publicly listed real estate investment trust on the New York Stock Exchange.

She’s also involved in a variety of trade groups focused on real estate investing. She earned her Bachelor’s degrees both in Economics and in Law, both with honors from the University of Sydney.

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Deb, welcome. Thanks for being here.

Thanks for having me.

I’d love to hear a little bit about what you’re doing, but let’s start at the beginning. You grew up on a dairy farm in Australia.

I was on a dairy farm for quite a great proportion of my childhood in rural Australia. We moved around a little bit, but that’s my background. I got an early course in working hard for long hours with poor compensation from a very young age.

You mentioned before we started that neither of your parents even finished high school and you were the first person to go to college or university in your family.

That’s right. Neither of my parents went to high school. Neither of my brothers went to college. I have a lot of first cousins. We’re a big dairy-farming family.

I broke out of the mold a little bit and decided to go to university after I finished high school.

How do you define a big dairy farming family? How many cows did you have on your dairy farm growing up?

It was anywhere between 100 to a few hundred. We went to a few different dairy farms. The way it’s done is that you can process huge amounts of cattle.

The size of farms is certainly different from when I was a little kid. The modernization and some of the technologies that have come into the dairy farming industry are pretty amazing.

Growing up in that environment, what did you envision yourself doing professionally before you went off to university?

I didn’t envision doing anything except being a dairy farmer. It wasn’t until I was around the 11th grade.

I had a great Economics teacher who somehow saw something in me that I didn’t think too much about at the time, but it turns out I could be a pretty good student. He put the word or the idea into my head that I should go to university. That didn’t happen until I was in the 11th grade.

Thinking that it was going to be a change, I said, “Okay.” I put in for university and I did well in high school. I got into the University of Sydney with a pretty hard degree and then went on and did a double degree first in Economics and then a Law degree. It was not something I’d contemplated.

You were contemplating being a tax attorney around the time of your graduation, yet you ended up in investment banking at Morgan Stanley. How did that all play out?

There was not too much thought process there either. I’d been to law school. When I was going into probably my last year looking to graduate, I applied to be a tax attorney at the big accounting firms.

I had put in for Morgan Stanley with no grand plan. I didn’t know what banking was. You learn from your friends and what they’re doing and what they’re aiming for.

I didn’t have a whole lot of guidance from home, but I did have some good professors throughout my college degree who gave me a lot of good advice along the way. I was lucky. I put in for Morgan Stanley and I was lucky and fortunate that somebody there saw something that was worth taking a risk on me.

I don’t mind telling you that I had a bet with one of my good friends from college on who would last beyond three weeks. She had started as a consultant and I’d started as a banker. I was convinced I wasn’t going to last.

I didn’t know anything about finance. I was way out of my league, but I’m here many years later. I can laugh about it.

When you started working for them, were you in Australia, or were you in the US?

I was in Australia. I had started out in Melbourne where Morgan Stanley’s office was at the time. I spent most of my first year working on the privatization of the power grid in South Australia.

I’d started on the job and they packed me off to work in South Australia. I got a call and they said, “You have to go to the US.” I showed up in our New York office and the rest is history.

I was a loaner here for a year. I ended up staying and I got internally promoted at Morgan Stanley. I went on, and here I am, still in banking.

You’re still in the New York area. How did you find the work during your early professional days? What did you find that you liked and didn’t like? I would imagine you didn’t have a tremendous sense going into it of what it was going to be like day-to-day.

I look back and I am surprised that I made it through my first year. I didn’t know anything about finance. I was clearly unsophisticated and behind my peers from what I had considered.

There were a lot of accountants and finance people, and I didn’t have that expertise. If I knew back then what I know now, I would’ve been even more concerned.

At the time, I rolled with the punches. There were no expectations of me coming from home. Whatever I achieved was going to be better than staying on a farm or working in a supermarket.

I set my own expectations. Morgan Stanley was a great firm. They were very good to me. They invested in me and trained me and were patient.

I had an associate in my first year in Australia who was exceptional. He taught me so much. He was so patient with all my mistakes and all the errors I made. It set me up for a very strong career in banking. He is someone I still keep in contact with.

As I’ve gotten older, I’ve become a big proponent for mentors because mentors are important. They can guide you, help you develop through your career, and see things that you might not consider important at the time.

The things you focus on at the same time when you’re young are not important but you think they are. Your balance is a little off. I am very grateful for the folks who helped guide me along.

Deborah Smith on Real Estate: Mentors are important. They can guide you, help you develop through your career, and see things you might not have considered important at the time.

Getting that early career mentorship can make a huge difference.

It’s the teaching. It is a combination of needing to figure things out on your own.

I tell junior folks who are looking to come into this industry that one of the big differentiating points in being successful as a junior [real estate investment] banker is knowing when to ask for help but also knowing when you shouldn’t. It’s being able to get that balance of figuring things out yourself but knowing there’s only so much time you should figure out before you should ask for help.

Some people can be unforgiving when things take a long time. It’s how you get that balance of being told, “Why didn’t you spend the time figure this out? Why are you asking me?” versus, “Why didn’t you ask me? If you needed some help, why didn’t you ask?” Getting that balance right can make a big difference in being a successful junior analyst.

In the scheme of things, I always tell people, “Err on the side of asking for help because I’d much rather have you seek clarity than spin your wheels.” There’s a certain amount you got to let people learn for themselves. You have to push them out of their comfort zones a little bit by not being there to prop them up maybe as much as they would like sometimes.

That’s where you get your balance in trying to figure out how to get that right. I’m not sure if the balance changes that much. As we get older, we get better at it. We get better at balancing.

You then went to Wachovia. You went to Lehman. You went out and tried the buy side and moved to CBRE to run their global M&A business before you branched out on your own. How did those subsequent roles round out your understanding of what you wanted to do professionally, your skillset, and all of that?

One thing I realized when I was a junior is that I’m a bit of a perfectionist. If I’m going to do something, it has to be to the best of my ability, whether it’s photocopying a book, making sure the staples are in the right place, washing dishes, or doing a deal.

I’m not sure I’m that great at having a filter between where I should give an A and where a B is good enough from an effort perspective. I always do everything with an A effort, which means I work long hours in the chase of perfection.

As a junior there, it was that same concept. Everything I did had to be exceptional. I only had one level. Whatever I had my hands on, it had to be exceptional. B wasn’t good enough. I realized that as I continued the desire to learn and grow I wanted to branch out and do healthcare.

I moved with my business partner, Lisa Beeson. I moved with her over to do healthcare and ended up doing 100% real estate. You’ve got to roll with the punches. I did 100% real estate, and then we moved over to Lehman and continued doing real estate.

Through each one of those moves, I had been concerned about being pigeonholed as a utility banker when I was a junior. Yet, here I am. I am well into doing real estate. I clearly got over the desire to not be pigeonholed.

It was one of those things where you need to figure those things out yourself. I moved around to a couple of firms doing that. My movements across those firms were relationship-direct. I’m a big believer that relationships are super important along with having mentors.

A lot of the stuff I do is based on relationships and trust. Trust still exists in banking. I moved through those firms and got a broad understanding of a lot of different industries. When you have to keep starting fresh, you get to learn to think through growing things, building things, and growing businesses.

By the time I moved to CB, it was an opportunity that presented itself. I’m not sure I thought too much about whether to be on the sell side as a banker or on the buy side too much because our job was so focused on being an investment banker within a principal investing business. It sounded like an exciting opportunity to challenge myself.

Taking that was an amazing opportunity. We got to oversee all of the investment programs globally and advise on corporate-level transactions and portfolio transactions. What I got out of it is to look at every transaction differently. Coming from the sell side, you don’t get as attached to what you are underwriting.

If you’re selling a real estate company, they’re numbers but it’s in the abstract almost. It’s like, “Here’s a property. Here’s a cap rate. What does the database say?”

It’s so much more high-level and generalized. I found over at the buy side, you can’t get away with that because you’re investing capital that you’re attached to and you own that deal.

I remember one of our first deals that came in was an office transaction. We came from the sell side, so we underwrote it. We did our numbers. We were very well supported by senior management.

When it came to pulling the trigger on the deal, my partner and I both turned around and said, “We’re not going to do this. I can’t get comfortable. Let’s go look at our assumptions.”

We owned it. We took an ownership role in it.

We called up the CEO and said, “We’ve decided we don’t want to do this deal.” He turned around and said, “Welcome to the buy side.” It’s about learning to say no. A distinguishing characteristic of our firm is the ability to say no.

We say no to the clients on transactions, “This is not the right deal. You don’t need to do this deal. You could do it and there could be amazing rewards, but it may come at the price of you being able to sleep at night. You need to balance those two things.”

Every deal we take on, we own it. We act as if it’s our own deal and whether it’s something we’d like to do ourselves. If we can’t get comfortable with that but then feel comfortable giving it to our clients, that’s inconsistent with our thoughts.

You got out of Lehman in time when you jumped over to CBRE.

I was in the right place, at the right time. You’ll start to get a theme out of this. I’ve been in the right place at the right time a lot of times. It seems to happen that way.

What was it like being in a real estate-focused firm at the beginning of the financial crisis in 2008 given that real estate investing was at the heart of the collapse?

It was an interesting time because we had also raised a very large value-add opportunistic fund in a way. At the same time, we had all these investment vehicles where there were bubblings of problems everywhere. What was unique about our group is that we were independent of the investment teams because we sat above them. We weren’t attached from a responsibility standpoint with any of the investment funds.

In the mornings, we were looking to deploy capital from our new vehicles. In the afternoons, we were brought in to help address problems in the existing ones. It was a very interesting role of looking and being optimistic, but at the same time, the world was on fire and a lot of things had gone sideways fast. That caused problems for everybody.

CB wasn’t alone. It caused problems for everyone. We were brought in because we weren’t attached to a fund. We could provide an independent perspective on whatever the investments were in each of those vehicles. We had to do that on a global basis.

It must have been a crazy time to be in the real estate space.

It was a crazy time, but it was crazier when we decided to start up a women-owned boutique real estate investment bank in the middle of the GFC. I don’t know if that speaks to our intelligence or our stupidity.

It could be your braveness.

At the time, I don’t think we thought a whole lot beyond saying, “This is something we want to do, so we’re going to do it.”

I don’t spend a whole lot of time thinking about what I can’t do. I only think about what I want to do and how I’m going to get it done. If I got up, for example, every day and thought about the amount of stuff I need to do that day, I would stay in bed. It would be easier.

We decided we wanted to do it and said that’s what we were doing. End of story. We’ve grown the business the same way that we see an opportunity.

If we want to do it, we were going to do it. The only question we ask ourselves is, “What’s required to get it done?” It’s not whether we should. If we like the idea, we make the decision and move on, and then it’s, “What do we need to make it happen?”

It’s good to have that action bias. It’s especially important when you’re in a small firm. What were your early days as an entrepreneur like more generally? How did you bootstrap the business and get yourself to having a going concern?

With the early days, long hours is the way I would put it. We didn’t think about it. We had to do what needed to be done.

We had gotten a phone call, which is what inspired us to start the business, to help an investment manager to acquire another investment manager. We were asked whether we would help with it, so we did.

Once you start doing that, then you need to be paid. You need an engagement letter and a company name. You need to incorporate.

The next thing you know, we had an office. It’s got a name over the door. It’s a shared space. We were taking baby steps here.

It was one thing that led to another. The next thing you know, we had a firm and we had people and clients. The rest is off to the races. In those early days when you’re still trying to balance or figure it out, we figured it all out on our own.

We didn’t take any outside money at all. We didn’t have a board or advisors. We didn’t have any of that stuff. We decided this was a great idea and we were going to do it, and then we moved forward.

What would happen during the night, we would be our analysts, associates, vice presidents, principals, and MDs. We ran the company. We all wore all of those hats. As quickly as we were giving advice, we were going back, processing it, and working it all out from the outset.

We wore so many hats. It was crazy, but we didn’t think about it. We did what needed to be done and then continued to move forward. As we got more comfortable with what we were doing, we hired and got a bigger office.

It was a consequence of, “We need to figure it out. That’s what we’ve got to do.”

Pretty much everybody, when they’re a new entrepreneur, makes mistakes. You probably have a long list. I could certainly relate to that. What were some of your early mistakes, and how did you adjust the course?

As a firm, we probably should have invested in culture a lot quicker in the early days and brought on people earlier when we were building out the firm. It’s good and it’s bad.

I’ve always had the view that we lead with the top line. We don’t lead with cost. You need to have the revenue to support the cost. We’re not going to hire 100 people in search of revenue.

That’s a philosophy from being raised poor. We didn’t have any money, so we counted every penny. Sometimes, that may be to our detriment because I am very focused on cost, exercising discipline, and making sure we justify the cost. If we’re going to incur the cost, we have to be able to justify it.

In some ways, we could argue that inhibits growth by not being willing to take on more risk than what we were willing to take. Could have we gotten to where we are faster? Maybe, as a result of that.

I’ve been at it for quite a while and we’ve done well. We’ve built the firm. I’m loosening up a little bit on this stuff. It’s not too much, but I am loosening up a little bit.

It’s a balance between spending money to making money, to leading with the top line and then having the cost follow. There is a balance there because it means that, do I always perfectly allocate my time? Probably not, as a result.

One of my friends who teaches entrepreneurship at Brown talks about the fact that one of the advantages of being a startup is that you don’t have a lot of resources. It forces you to think about how to get things done without having a lot.

You watch what happens to these startups that get some big funding round. They go out and they blow a lot of money on things that probably aren’t important to the future of the business. In some ways, being resource-constrained can be an advantage.

It’s leading with the belief of, “How do I make money out of this?” It’s interesting because that’s what one of my clients asked me. She was like, “How do I make money out of this?”

I’m so entrenched in the mindset of myself saying, “How do I make money out of this?” When I’m talking to clients, I’m not giving my thoughts or sharing my thoughts on any other basis. That’s the basis on which [advice] is being shared. It’s because I don’t know how to think about it any other way.

I never had that environment since we started where you could be thoughtless and careless with dollars. I’m as thoughtful and careful with people’s capital as I am with my own. That all comes back to the buy side of needing to live your advice.

When you’re in the banking background I had, there’s only so much attachment you need to have to your own advice. You’re not there post-close.

In our firm, we’ve built the business on the back of pretty much two things. One is that we understand the industry. Our advice is informed advice.

I also think that along with that, we have to live and breathe the advice that we give because we came from that background. It fundamentally changed us. We focus on, “What’s this deal going to look like post-close? Does it make sense in that framework?”

With those two things, most of our clients, if not all, are repeat clients. They come to us to do multiple things over time.

Once we start working with a client, they become entrenched. We look at them as we treat ourselves as lifecycle bankers. Our job is to be an extension of our clients in how to think about things and give them the resources and help that they need.

If we can’t help, I’m the very first person to say, “We’re not your people for this. This is not our expertise. I don’t need to take on something that is not going to work and that I can’t deliver on. My life is too short. I can’t make any money out of that.”

You are a women-owned business operating in a very male-dominated industry. What’s that like? Have you faced any particular challenges being a woman-owned business in this space?

Investment banking, in general, does not have a lot of women in it. Certainly, where I grew up, there weren’t. The number of women who make it all the way to the top is even fewer.

In real estate, it is exactly the same. There are women in real estate, and increasingly so, but it’s a very small group once you get to the C-Suite.

There has been a focus on how few women there are in senior positions within the industry. I hope to be an advocate to change that, but I’m not sure it’s a consequence of anything environmental that has held me back.

I went into banking. Banking took a chance on me. I’ve survived through banking. CB took a chance on me. I’ve started up my firm, and clients, every day, take a chance on me. Most, if not all, of our clients, are males.

I would like to think that we get hired because we’re smart and we’re good at our jobs. Quite frankly, I’m perfectly comfortable thinking that is the case.

That’s fair enough. The best case is everybody’s treated equally. It implies we’ve gotten to a point of everybody is being viewed equally.

I don’t know how I could sit here, have this conversation with you, and be anything other than grateful for the industry that has helped me get here.

I’ve had a huge amount of mentors at every step of the way throughout my career, and they’ve all been men. I’m very fortunate that I have business partners who are women who are fabulous. They’re my closest friends. There’s a complete level of trust there.

I look at what needs to be done and how I go about doing it. I don’t let a whole lot of anything else factor into what I need to get there.

You could drive yourself crazy if you want to overly focus on the external factors: what if, what could, what should, or what could be. I focus on where I need to go and what I need to do to get there.

Deborah Smith on Real Estate: You could drive yourself crazy if you overly focus on the external factors of what if, what could, or what should or could be. Focus on where you need to go and what you need to do to get there.

That’s a good philosophy to have. Let’s fast forward. What does the business look like? How many people do you have? How many locations do you have?

We’ve continued to grow over time. We’ve had a bit of a hiring spree in 2022. We’re based in Stamford, Connecticut. We were in the city for many years and moved out right before COVID.

It’s not because I was smart about that. It happened to be a case where we had moved out of the city and the partners were saying, “Why should we travel an hour and a half each way each day?”

It was like, “Do you add up all those hours and how much time we’re wasting traveling? We should move the office.” We moved out, which has been great. We have a satellite down in Tampa, Florida. I have a business partner out on the West Coast.

We try and do a broad coverage. As we’ve built the business a little bit through COVID, we balance in-place work with out-of-place remote. We make it work.

As for the business and where we are, we built the business around our first investment management deal. We had originally started doing capital raising, too, within real estate.

Fast forward, our business has gotten a lot broader, whether it’s [real estate investment trusts] REITs, owner-operators, or service companies. Investment managers are a big piece of our business. We work on corporate-level transactions there.

We still do capital raising, so we’ll do joint ventures, separate accounts, and private placements. That business has continued to grow.

A couple of years ago, we began building out a consulting practice. We do a lot more on the consulting side, whether it’s for pension plans, insurance companies on allocations, or how to think about deploying capital in the real estate space and capital market.

We work on strategic planning for investment managers, owner-operators, etc., on how to grow their business. We do ESG consulting.

It’s a little bit of the gamut, but what ties all of it together is that we’re a real estate industry specialist. We can touch and provide services across the spectrum, but it comes down to understanding asset levels up and corporate levels down.

Since we want to own our space, we focus on making sure we are fluent and we understand real estate. That’s what drives it. I don’t understand how we could give strategic advice to someone but not understand the industry that they operate in at a fundamental basic level.

On our website, as well as on our LinkedIn, we publish a lot of papers. We call them CCG Perspectives on things and trends in the industry that we see coming. That’s because, if you think about it, we straddle all buckets of capital.

We straddle from the LPs or Limited Partners who have the capital all the way down to the owner-operators and service companies who are deploying the capital. We get to see what people want, what people need, and where people want to put their capital.

That’s what makes up the spectrum. That gives us access, a level of knowledge, and an understanding that touches all facets of all areas of the real estate industry.

We can process that and use that to be very intelligent and form our own views around where we think the trends are. I call them, “What’s the next new thing? Is it just a new way of doing something old and looking at those things?” We have a lot of fun doing it.

If we see something, we’ll write about it. As a result, people read this stuff. They call me and want to debate it, and that’s great.

It’s good to have that thought leadership. It brings some focus to a different way of looking at you relative to your peers, right?

Yes. We’ve done quite a bit of work in the insurance industry where folks are looking to build a presence in real estate.

They’re like, “How do I do that? I want to be in real estate. It’s an asset class. We’re not in it. How do I go about doing it?” I say, “Okay.”

We can help them develop a strategy and then help them find the target. We can then help them deploy capital into it. It covers the full spectrum of meetings and being a full-service advisor to servicing whatever they need in order to do that.

The reason we can do that is that we know the industry players, the managers, and the companies that own the real estate. We also can say, “If this is your criteria of what you want, then we can help you match where that would most suit you and how to best fit it.”

What we’re advising on isn’t just a list of targets. We’ve thought about it and we’ve put the time and energy into saying, “This is a good cultural fit.” Not only that, these guys are good at this and these guys are good at that. It’s that level of capability such that when we call folks with opportunities, people take our calls because we think it’s a good fit.

We’ve built trust and a reputation around it, such that if we call you, it’s because we think it’s a good fit for you. We protect that reputation. At this point, it helps define who we are as a company.

What about your role specifically? You’ve got partners. How do you divide things up, and where do you focus your own time? What is a typical day like for you?

We are in business-building mode. I’m always in business-building mode.

I spend a lot of time thinking, “What’s the next thing? What’s the next opportunity? What do I see?”

We’ve started to also move into looking at investing and acting as an independent sponsor. We’re starting to use our capabilities in understanding corporates and real estate and saying, “Why don’t we take some bets on these things?”

To companies where we ordinarily couldn’t have worked with because they can’t afford us, we’re saying, “Why don’t we work with you? We’ll help raise capital for you and then we can help you build your company. All these services that I charge somebody else for, I can take and invest with you and help you build that business.”

That requires a level of understanding and ability to underwrite the company, the product, and whether it’s got a hope of making it. That’s also an underwriting of the team and being able to assess whether we’re willing to take a bet on the management.

We’ve certainly seen a lot of technology companies come into this space. Part of the reason they don’t work is that they don’t understand that there’s a challenge in making sure you understand the real estate and making sure that if you have a good idea, you have the goods to execute it.

To be able to come up with that view is a little bit of saying, “I’ve done this a long time,” but also making judgment calls on whether the management team can execute. I’m spending a little more time on that.

I’ve got management of resources, management of business lines, and management of deals. I’ve got the pipeline, what we’re covering, whom we’re covering, and how we’re going about it. We’re making sure we’re putting resources in the right places as the business continues to grow.

As we’ve done that, we’re filling in the ranks and making sure I can move out of that execution place but be able to make sure the company still functions. I’m still involved in things so that our clients still get the best advice. Staying on top of all those things is a balancing act.

I can imagine. What do you make of the real estate market? In the commercial space, you’ve got back to hybrid work. Companies are maybe needing less office space because they don’t have as many people in the office on a day-to-day basis.

The residential real estate market has been scorching. It’s probably cooling off a bit with interest rates going up. What’s your take on the state of play in the market itself?

COVID created some interesting opportunities. A lot of the press was focused on what was going on in the hotel space, why this is tough for retail, and why it’s tough for the office.

For folks in the industry, it’s an exciting time because the market had gotten super efficient. Arbitrage opportunities were increasingly difficult to find. Real estate got pricey through COVID if you think about it. Whenever you have people migrating from one place to another, the ramifications for the real estate industry are significant.

Let’s think about it. You take a family. They move from New York to Texas. They need somewhere to live. Do they rent? Do they buy?

Once they’re there, the kids need to go to school. They have to find a new store to go to the grocery. Are they moving into an office or are they not? They’re still down there.

Whether there’s eCommerce or not, how are you going to get them their products? I’d be like, “I’ve got to deal with logistics. How is [the area] in logistics? What about cold storage? If I’m shipping stuff there, I need cold storage. I need labs. I need a medical office.”

If you take that one family and [multiply] it out, you can start to see shifts in migration and how it rattles through real estate.

The trick for the winners, and there are some losers, is where they go. I’m not talking macro.

It’s good enough to say Texas. That’s great, but where in Texas?

Real estate’s a local market business. Where do they go in Texas? Where do I put that supermarket? If we’re going to judge it at a 1-mile, 3-mile, or 5-mile radius, where are they going?

You’ve got to stay on top of this. You’ve got to manage the supply. You have to manage the demand. A lot goes into something like that.

You’ve also got to balance in there the extra change in demographics from generational shifts. We’ve already seen over the past years the generational shift as the Millennials who have come up have become renters, are working, and are shopping. Patterns as individuals have evolved.

If you think about the next technology age, the next generation is very communal. They’re focused on social or work-life balance. I’d love a dime for every time someone had said to me, “That’s not the way it was when I was younger.”

That concept has led to changes in human behavior. Real estate has to respond to that as well. As much as real estate gets identified as a B2B [industry], it is B2C because it’s the consumer that drives all of these patterns and all of these changes.

Deborah Smith on Real Estate: As much as real estate gets identified as B2B, it’s really B2C because it’s the consumer that drives all of these patterns and changes.

Balancing that over the past few years has been awesome, to see the evolution. If you’re balancing senior housing, there are split-outs of active adult living, which is a new niche product. It’s super cool.

There’s manufactured housing, which I wrote about, and the role of technology coming in and disrupting that industry. We have co-living emerging as a new form of multi-family, although I’m not sure it is quite new, and then also co-working.

There are all these new things even within your big buckets. New people have come in and looked at things in a new light and a broader, fresher perspective. That’s awesome.

For an industry that has been resistant to a whole lot of change, change is forced on us. Those who adjust move with that and become adaptable, which is a succeeding trait of any entrepreneur. There will then be winners and losers.

That’s why, for us, it’s been an exciting time to be part of the industry and to be part of the team trying to see what’s coming around the next corner as opposed to saying, “I’m worried about what’s happened.” Yesterday’s gone. It isn’t coming back.

You’ve got to be forward-thinking in where you’re going because to get anything out of the ground or to close on a deal doesn’t take days. It takes a long time. You need to be forward-thinking. What is the risk that you’re willing to take?

That’s inherent in investing in illiquid assets with very long payback times.

You’re also on the board of a public real estate investment trust. Different from being a business owner, how has being on that board made you a better business owner?

The greatest benefit is that I’m not the CEO. I get to advise boards and CEOs of REITs, public companies, and private companies, too. That’s our business.

I balance running my own business as a CEO. Someone else is responsible for that [where I’m on the board]. In some ways, when I’m advising on a board, I take the same level of integrity toward performing my role there as I do [as the CEO]. At the end of the day, though, I’m still not the CEO.

You’ve got that backstop. The ball ultimately goes to them, right?

Yes. The CEO is that person is at the end of the day. That’s why he or she is called the Chief Executive Officer.

You’re also involved in some pretty high-profile trade associations in the industry. How do you think about the time you commit to them and your involvement in them relative to the other things that are keeping you very busy?

One industry organization we’re involved in is NAREIM, and I love it. I’m on the chief executive officer committee for that. We had our NAREIM offsite out in Utah. It was phenomenal.

It doesn’t have the same format as a lot of the other industry conferences that are sponsored. It’s a small team. It’s a small group with smaller numbers.

We get to sit there with other C-Suite [leaders] and CEOs and talk about real issues of the day. In round tables, we get to interact with peers around those issues. I get to be part of the planning committee and help decide with the rest of the committee what those issues should be, and then have the discussion on them. I always find it so collaborative.

It’s inspiring. People are so willing to share information about the challenges. It’s an open dialogue.

For me, it’s both learning a lot and giving a lot. It’s a phenomenal organization.

It’s great when you’ve got those trade associations that do their part. Some are better than others. To a large degree, they’re only partly made by the full-time staff. What I’ve experienced is that they are oftentimes more driven by the level of engagement that they’re able to get in people who are in the industry itself.

To your point, that’s where the most interesting conversations happen because you’re all out there doing it day-to-day. You are practitioners in this space and have a [deep] level of understanding. The language that you can speak to each other is at a different level than what would otherwise be available.

I get to talk about things like how you retain talent. We get to talk about the challenges that we see. Talent retention is tougher than it’s ever been.

It’s keeping your people and then making the right level of commitment for the right level of return. With the next generation, I pick up a resume and they’ve got a lot more jobs on it than I had at their age.

When I was at Morgan Stanley, I thought I was going to stay there forever. I was there for a long time. A lot of the resumes you see have a lot of different positions on there. They’ve moved around a fair bit already.

It’s a cultural shift, and it plays into how they live, how they work, and how they interact. It is different.

My business partner and I have known each other for twenty years. A lot of the people we work with at our firm have been with us since we started the firm. We’re a well-oiled machine, whether it’s internal or external. We use the same people.

We’re very loyal in our relationships. That carries through even with our clients, where some of our clients we’ve had for over a decade. We work with them on multitudes of different things.

Loyalty, trust, working as a team, respecting the team, and contributing to the team is incredibly meaningful to me. I’ve tried to instill that same mentality throughout our firm, but it’s hard. Everyone is only part of one thing.

There are external forces and external things that influence every day in a world driven by technology, which makes such a difference. When I was a young banker, we barely had cell phones. I remember when we got a PalmPilot and we thought it was extraordinary.

The world is fluid and transparent. How you continue to operate within that, and instill loyalty and trust, is increasingly difficult relative to when I was a younger banker.

Things have changed. Values have changed. The way people look at work has changed. The way that they move around, and in some cases, move in and out of the workforce – all of that continues to evolve.

For me, that’s part of what makes it interesting. It’s not the same world that it was last year or the year before that.

I’m still doing this many years later. That’s even influenced how I look at hiring.

I’m a non-traditional hire that way because I did not have the background. Someone took a chance on me to get to me to where I am. They clearly saw something in me in order [for me] to make it this far.

I’ve been doing this for many years and I still love it. I get up every day and I can’t wait to start my work. I know what needs to get done. I could work all the time if I didn’t have other responsibilities and be perfectly happy doing it.

I can’t believe I get to call this a job. I’m lucky enough to do it every day. I feel blessed because a lot of people spend a lifetime looking for that thing that makes them happy. I’ve had the benefit of having it since the day I left college.

It’s an incredible blessing. Work is an important part of your life. What do you do to recharge your batteries? What are the things that give you joy and passion outside of the workplace?

I love to run, in part for my sanity. I’m not going to run any marathons, but I do love to run. I like to hang out with my family. I’m lucky about that.

I love to sit and read exceptional, and sometimes trashy, books. I love information, so I do a lot of audiobooks, too. I love that balance. My favorite pastime is that probably I read the Weekend Journal every weekend in my kitchen when it’s peaceful and quiet and nobody’s up, not even the dog.

I get to sit there and read that paper from cover to cover and I have however many cups of tea it takes me to get through it. I look forward to it every weekend, the peace and quiet for a minute. I always learn something new.

I read it cover to cover. It’s part of my weekend routine. The one staple that I have is to enjoy my newspaper every weekend. It’s very early. It’s still dark. Getting up before everybody else gets up is always the challenge. If it gets interrupted, it’s game over. I won’t get back to the paper. Once that moment is lost, it’s gone forever and I can’t get it back.

It’s good to have those moments of peace and also to have those daily or weekly rituals. How are you thinking about the next few years of your career and your business? What’s ahead for you?

I want to continue growing our business lines. Earlier on, we had thought about making and doing investments ourselves and investing alongside limited partners. I’m going to get that off the ground.

This year, we’ve started to do it. I want to spend more time on building that piece of our business and putting ourselves behind the deals instead of telling others they should do them. It’s investing in ourselves. I’m excited to build that out and look for opportunities.

We’ve got a few things going on to build out our existing business. I tend to look at how you grow through product distribution and geography. I try not to do it all at once because that’s an integration nightmare, but to be a little methodical about it.

I continually look at each one of those buckets and say, “How can we grow our business and focus on the best use of resources? At the same time, what do we need to do to get the best use of resources? How do we go beyond that without getting too ahead of ourselves and be disciplined about it?”

If the bottom drops out of the world, I don’t want to lose sleep about that. I’m cognizant of balancing those things but have a desire at the same time to build everything.

Every year has been more exciting than the last. I’m super excited about the things we have going on. I’m super excited about what our clients are doing and what we are doing as a team. It’s cool.

That’s a great place to be. This is the last question. What advice you would give your younger self, or for that matter, anybody else who’s contemplating managing their career?

Things I thought were so important when I was younger and I was starting out weren’t. I should have enjoyed things more for what I had.

I worked an enormous amount of hours, but things that I thought were important probably weren’t as much as I thought they were. Now that I’m older, I get to give advice. I want to give advice that I feel confident on.

For anyone who’s reading, trust your instincts. Trust your gut and go with it.

Don’t second guess. It’s an entrepreneur’s nightmare. Make your decisions. Move on.

Live with them because there’s nothing that bad that you can ever do that cannot be unwound. There’s nothing that bad that you cannot fix.

Go with your instincts. Go with the flow and don’t sweat the small stuff. It’s not worth it.

That is great advice. We’ll wrap it up there. This has been a great conversation.

It has been good to get to know you and hear a little bit more about the real estate investing space. I appreciate you reaching out. Thanks for making time.

This has been fun. I hope your audience gets something out of it. If we’ve done that, then we’ve served our purpose.

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I’d like to thank Deborah for joining me and sharing her journey through real estate investment banking to investing. If you’re ready to take control of your career, visit PathWise.io.

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About Deborah Smith

Deborah Smith is the Co-Founder and CEO of the CenterCap Group, a certified Women-Owned Business and boutique investment bank based in Stamford, Connecticut that is focused on “All Things Real Estate.” CenterCap provides strategic advisory, capital-raising and consulting related services to private and public sector companies and fund managers in the real estate industry.

Deborah has worked in financial services, with a focus on M&A and real estate investing, for more than two decades, with past roles at Morgan Stanley, Wachovia, Lehman, and CBRE. She branched out on her own 13 years ago.

Apart from her work at CenterCap, Deborah is a Board Member at AIMCO (the Apartment Investment and Management Company, a publicly listed REIT on the NY Stock Exchange), and she is involved in a variety of trade groups focused on real estate investing.

Deborah earned Bachelor’s Degrees both in Economics and in Law, and both with honors, from the University of Sydney