EisnerAmper Q&A with Mark Blount, CEO, Spear Capital
- Feb 27, 2020
Spear Capital Group (SCG), founded by former National Basketball Association (NBA) Player Mark Blount, acquires and develops multi-family properties and hotels in the red hot South Florida market both internally and through partnerships with asset managers. EisnerAmper sat down with Blount who shared his story on why he was inspired to launch SCG, the attractive opportunities he sees in the Sunshine State and, finally, how his prior experience as a professional basketball player being on a team lends itself to his role as CEO of his current firm.
EISNERAMPER:Can you please give us a brief overview of SCG?
BLOUNT:SCG acquires and develops both multi-family housing and hospitality properties with waterfront views in the South Florida market from Palm Beach to Miami to Key West and more.
We seek to exploit often-unrealized values of assets that our competitors typically overlook. Whether it be making an acquisition for long-term hold and full development, or razing buildings of prior-unrealized asset value with new construction, or straight value-add acquisition and/or development, there are numerous opportunities in the Sunshine State.
We are also amenable to partnering with asset managers to work with us on deals from first mortgages to occasional seconds along with joint ventures for short, medium, and long-term horizons to ultimately generate higher capitalization rates and margins.
Our long-term value strategies include the pre-sale development to the builder/investor to long-term holds with value-add properties. We also develop residential and commercial property with vacant land in an attempt to enhance its value given potential public benefits; and purchase additional residential properties in Florida and throughout the South East Coast of the U.S. In short, when a property is zoned T6, the developer is able to offer benefits to the public. The increase in stories added to a project can be resourceful to the developer and the municipality.
EISNERAMPER:Why are you focused on South Florida? What opportunities does that region present and why?
BLOUNT:We see a lot of the 1960s and 1970s multi-family housing units and hotels in the region that need to be upgraded and redeveloped and feel that component of the Sunshine State is a great market for joint venture partners. Also, besides the attractiveness of the beach and waterfront, in downtown Palm Beach, Broward and Miami especially, it is convenient for people to walk to their destinations.
All in all, we see many of the State’s assets poised for solid growth strategies, even given the ‘squeezed CAP environment’ of South Florida, in ever-high demand. Further, multi-family properties in Florida is a $7.6 billion industry producing $2 billion in annual profit, according to industry reports, which continues to be deemed the number one asset class by leading commercial analysts. We want to maximize on these opportunities.
EISNERAMPER:Initially when you started developing and acquiring real estate in South Florida, you focused on multi-family housing. Tell us why you decided to add the hospitality sector to SCG’s remit and why you believe the hospitality sector presents more opportunities.
BLOUNT:SCG focuses on both multi-family housing and hotels, and we believe South Florida presents many attractive opportunities to both acquire and redevelop residential and commercial properties. Talking about hospitality, given the proximity to the beach in many parts of the State, there is an opportunity to maximize return not only on Class A Hotels but also Class B and C hotels. The volume of individuals who come to Florida for recreation, business and leisure will continue to grow. We like the hospitality sector for this reason.
EISNERAMPER:I noticed you are also starting to dip your toes in Puerto Rico. Puerto Rico has been an interesting place the last several years. Tell us about what you are working on there and the opportunities you see.
BLOUNT:We are still in the start-up phase in Puerto Rico. We think with all the qualified opportunity zones on the Island, besides the tremendous tax benefits of developing and acquiring multi-family properties there, doing deals there is a great way to empower the residents on the humanitarian side because we want to uplift the people there with better housing.
EISNERAMPER:You have a very interesting background for someone who forayed into real estate development, spending a decade as a professional NBA Player. What similarities do you see between the NBA and the real estate business? And further, how does your background set you apart from others in the industry?
BLOUNT:Just to give you context, I spent ten years in the NBA beginning in 1999, playing for the Boston Celtics, Denver Nuggets, Minnesota Timberwolves, and Miami Heat. During my decade as a professional basketball player, the one thing I learned that still sticks with me today in my career is the importance of team building and how having a strong team around you leads to success.
Before starting SCG, when I retired from the NBA, I did a bit of real estate development focused on small multi-family properties in Palm Beach County and had put teams of people together to oversee and manage each one.
In the hospitality space where I focus today, I constantly rely on a team around me for each property, which is crucial to success. From the management to the front-desk to engineers and more, it’s a 24-hour entity you can’t take our hands off. There is not a day off from cleaning, accounting, and making sure everyone is doing their part. It’s just a big moving wheel and if you have right team in place for each property, you can do really well.
EISNERAMPER:What was one thing you learned about from your days in the NBA that you still take with you today as CEO of SCG?
BLOUNT:Going to work everyday and just trying to make sure your organization is moving in right direction. That was the most beneficial part of playing in the NBA. Just like I constantly got better at basketball, I constantly want to get better are maximizing value in real estate.
EISNERAMPER:I noticed you launched some food franchises through FOCUS Brands, including Auntie Anne’s and Cinnabon, since retiring from the NBA in 2010. Tell us how you got involved in that business.
BLOUNT:I had a great opportunity with Katrina “Kat” Cole, currently Chief Operating Officer and President of North America for FOCUS Brands, who at the time was the former President of Cinnabon, to launch the Cinnabon franchise. She took me under her wing where I learned the brand and got the skills I needed to start two Cinnabon locations in Palm Beach County and Martin County in Florida and ran those for five years from 2012 until 2017. This was essentially my segue, managing Cinnabons, to launching my own firm today.
EISNERAMPER:What keeps you up at night?
BLOUNT:Well besides my kids, jokingly, whatever keeps me up at night is work-related since everyday there is always something new that comes up and you always have to do your best.
EISNERAMPER:Are there any final or concluding thoughts you would like to share.
BLOUNT:We are doing a great job of finding quality properties and closing on them and now we have some in the pipeline in Marathon, Florida, Downtown Miami and Palm Beach County, although I don’t want to disclose which ones because in South Florida, competition is fierce and everyone is trying to be the first contract that the seller sees.
Hospitality Intelligence - Q1 2020
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Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.
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