John Lettera talks with Richard C. Wilson about building Fairbridge Asset Management's real estate platform. He shares how disciplined underwriting, property visits, and an institutional operating structure supported its growth.
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About the guest
John Lettera. John Lettera is co-founder and partner of Fairbridge Asset Management, which manages a real estate platform with over $1 billion. He has over 20 years of legal experience, more than 25 years in real estate debt originations, and served in the US Marine Corps, including four tours in Iraq.
Key takeaways
- Lettera says he focuses on downside risk and believes that doing so helps the upside take care of itself.
- He recommends staying within areas and investment types you understand, and being disciplined enough to walk away from deals that do not meet your criteria.
- His team uses technology and AI, but still sends someone to walk each property and meet the sponsor there.
- Lettera started with $100,000 deals using his and his family's money, then expanded from the Bronx to the tri-state area and eventually nationally.
- He says institutional investors began approaching the business as it grew, and that audited financials, third-party advisers, legal counsel, and fund administration helped build an institutional platform.
- He advises firms seeking institutional capital to meet institutional due diligence requirements and invest in the systems and services those investors expect.
- Lettera hires many people he has encountered across the table in business, observing how they negotiate, underwrite, and assess real estate.
- He looks for borrowers to have real skin in the game and views claimed sweat equity as insufficient when it does not represent actual equity invested.
- He says repeated offers of equity upside alongside debt can be a warning sign, and his firm prefers to lend from the top of the capital stack.
- Lettera says good deal flow attracts investors: when he sees a good deal, he pursues the person offering it.
Best quotes
"What I have always tried to do in my career is just be authentic, be myself, and be fully transparent with my investors."
"I'd say I spent a lot of time concentrating on the downside. And I've always subscribed to the theory that only the paranoid survive."
"Everyone thinks they have the cutest baby. So don't fall in love with the asset. I cannot say that enough. Fall in love with the deal, not the asset."
"Someone in my company is walking the property, meeting the sponsor, and I want to meet the sponsor at the property. You're not at the property, we're done. Deal's off."
"I think if you run a business as diligent and as successful as I have with my partners at the time, the institutions truly do find you."
"No institutional will invest with you without an institutional platform and you have to be able to pass there."
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