PCG Commercial, Inc.

BACKGROUND

Introduce your business and what you do there.

We’re a multi-strategy investment firm. We manage over $10 billion in assets, and my work consists of providing portfolio financing against a portfolio of collateral.

OPPORTUNITY / CHALLENGE

What challenge were you trying to address with PCG Commercial, Inc.?

We have a portfolio of real estate assets that are typically part of the collateral pool provided by the borrower, and we need to ensure that the borrower reflects their value accurately. For that purpose, we needed to hire a third-party real estate expert to help us diligence those assets and provide independent valuations.

SOLUTION

What was the scope of their involvement?

We established a joint venture framework with PCG, where we have a set of terms. On each of our investment projects, they co-invest 10% of the total amount, and then they get a profit after meeting a certain goal in terms of rate of return and return of invested capital. They mainly focus on California, but we have done work with them outside of California on select projects as well.

What is the team composition?

PCG is a small company, so we have worked with less than a dozen people.

How did you come to work with PCG Commercial, Inc.?

We used to invest a lot in California, and they were recommended to us by another investor, so we started working with them. We like them because they share the risk and handle the diligence for us. They aren’t just evaluating the assets; they’re actually putting their money on the line.

How much have you invested in them?

We’ve invested an amount between $1 million–$5 million.

What is the status of this engagement?

We started working together around August 2014, and our collaboration is ongoing. We have a pipeline of projects, and we’re always working with them on multi-family office or bridge loan deals.

RESULTS & FEEDBACK

What evidence can you share that demonstrates the impact of the engagement?

PCG is very thorough; they take a proactive approach and scrub the underlying property financials. Additionally, they’re conservative. PCG also knows certain markets really well, so they get us various deals in those markets. We really think highly of them in certain geographies and asset classes.

How did PCG Commercial, Inc. perform from a project management standpoint?

We use phone and email for communication.

What did you find most impressive about them?

In one project, we thought the deal was pretty good, but PCG wasn’t too thrilled with it. Ultimately, we passed on the deal, and that deal turned out to be very difficult later on. As someone else accepted the deal, they inherited the problems. We were glad because PCG helped us not close that problematic deal.

Are there any areas they could improve?

As PCG is a small shop, they don’t advertise, and they invest in smaller deals. I wish they could invest in larger deals, which would be helpful for us.

Do you have any advice for potential customers?

Don’t just hire PCG for easily evaluable assets. They offer more value in complex situations.