I’m continuing my conversation with Joshua John, one of the two partners at Royalton Capital in New York City. Joshua’s ability to incorporate space, design and materials into quality construction has enabled him to achieve premium rents and valuations for his projects. In line with the new normal, Joshua and I are chatting on a Zoom video call. I look forward to learning more about his sense for opportunities.
Joshua, because of your background and passion, you have developed a great ‘nose’ for unusual opportunities. It has partly to do with your intuition, knowing it well enough that you can trust it and act on it. How does that work and why is that relevant for your investors?
“I’ve had the experience of spearheading development projects from start to finish, whereas Jin has a background investing across the capital structure as well as managing assets.
“Those skills allow us the confidence to trail blaze in areas that others prefer not to go, or may not be so obvious. We try to look far enough ahead of the wave to capture an opportunity and benefit by the upswing of an approaching market. Our reliable instincts come with being able to zero in on what is significant in order to make the right decisions, and be the closers over multiple cycles. This gives us a competitive advantage, and over the years, opportunities have come to us that are more complex or require more vision to realize the upside. We spot trends in the early stages, and then integrate them in our ongoing work.
“For some time now, our focus has been on creating living spaces along a ‘live, work, play’ theme. Design, volume, light, indoor/outdoor spaces and a healthy lifestyle are touchstones for us. Over the last decade, features available only at the upper end of the market, such as outdoor spaces and home offices, have become more accessible and desirable. For example, in one of our recent projects, we decided to build a prototype of a residential unit as a model for a 50-unit residential building that we were in the process of getting approved. Like all budget-constrained projects, the challenge was to create a superior environment that embodied key trends, with just the right accents to evoke a luxurious feel and generosity of space. Close coordination with the builder and subcontractors, careful planning with the architect and engineer on design, as well as sourcing and procurement of materials, allowed a great product to be produced.
“Ultimately, our strategy is validated when our efforts are met with market affirmation — in the case of our model project, within days of completing construction, our first four tours got four quality offers, and we fully leased the asset above our underwriting. Our experience is that such carefully appointed spaces result in unusually low vacancy rates and consistently higher rents.”
Sounds like a great project, can’t wait to learn more about new and upcoming projects.