Like most capital markets executives, Paul Hsu is keeping a close eye on what's happening with the economy as rising interest rates and inflationary pressures trickle down into commercial real estate pricing.
The new senior partner at Dallas-based boutique capital markets firm Goodwin Advisors is telling real estate investors with time and money on their side to "save your money and wait for the opportunity," when it comes around. He anticipates seeing some distressed real estate hit the market as the nation grapples with the threat of a recession.
"If your job as a money manager is to invest capital this year, you'll find a deal that makes sense for you and execute it," Hsu told CoStar News. That is, "if you have the bankroll with enough income and enough in the bank. But the metrics have to work for you. I'm telling clients not to spend what they don't have and not over leverage themselves."
Hsu has nearly two decades of experience in hospitality real estate, including prior roles with capital markets services provider HFF and investment services firm The Plasencia Group. Over the course of his career, he has completed nearly $5 billion in investment sales, debt and structured finance deals. Today, he is advising owners of lodging real estate on pivoting strategies during the ongoing uncertainty in the economy.
The executive, who grew up in the Houston area and is based in West Florida, said he is already seeing some troubled deals in the market after investors bought on a valuation high with the help of short-term loans prior to the change in interest rates. He's also seeing deals getting "killed" as financing quoted two months ago just isn't available any longer.
Goodwin Advisors launched during the beginning of the pandemic. With the addition of Hsu, the firm now has offices in Tampa, Florida, as well as Dallas and Houston, serving clients throughout the United States.
On the hospitality front, Hsu said business travel is not back and, even though the leisure resort markets are doing well, it's a honeymoon period with most consumers unable to pay $600 a night for a beachfront room. Even though Florida's hospitality industry is doing quite well, Hsu said it's not sustainable without travel paid by businesses.
Hsu, who studied hospitality at Cornell University and played forward on Cornell's junior varsity basketball team, said even his own business travel schedule hasn't resumed since the beginning of the pandemic because of the ability to conduct meetings on services such as Zoom. He said he does believe the hospitality industry will return to pre-pandemic levels — people "being social creatures."
Why did Hsu want to join Goodwin Advisors? It was partly the firm's focus on serving clients without the burden of working for a larger company that "churns and burns" its talent or has inner politics to navigate, he said. The firm's two partners, Evan Stone and Art Buser, work on select deals with "high-touch service" for clients, he said, which he found appealing.
"They are still out there as rainmakers, but they are focused on a lifestyle and it's not all about just chasing money," Hsu said.
Likewise, Buser, who is co-managing partner, said clients are seeking meaningful advice like never before, which is why the partners wanted to add an experienced partner such as Hsu with his extensive knowledge of capital in the hospitality sector.
Another factor? Goodwin Advisors' family-oriented culture.
Hsu, a family man with a 13-year-old son, said, "I get to put my family first and I don't have to feel bad about it."