Private equity can be an attractive avenue for accredited investors, but it requires an nuanced understanding of complex deals across very different asset types. As Director at boutique private equity firm, ZT Corporate, Chihiro provides invaluable perspectives from his experience in the industry.
From medical facilities to car dealerships to commercial real estate, he explains how they analyze and structure diverse investment opportunities. For investors interested in alternative assets like private equity, Chihiro stresses the importance of thorough due diligence before committing capital.
Transitioning from Solo Syndicator to Institutional Private Equity
Early in his real estate career, Chihiro was a solo operator doing multifamily syndications. He closed his first deal in 2019 and built a portfolio of nearly 600 units. But he began to feel isolated and sought the benefits of being part of an institutional team.
In 2019, he joined ZT Corporate’s private equity practice. While he embraced the variety of deals and professional environment, Chihiro acknowledges he went from being the “captain of the ship” to supporting and being supported as part of a firm. For him, the camaraderie and collaboration made the transition worthwhile.
Today, ZT Corporate has over $1.2 billion in enterprise value across healthcare, car dealerships, and commercial real estate. Chihiro enjoys evaluating diverse deals and working cross-functionally with teams handling different aspects like capital formation and lending.
Vetting Complex Deals with Audited Financials
Unlike syndications focused squarely on real estate, ZT Corporate constructs portfolios across eclectic asset classes. So how do investors properly evaluate these complex private equity deals?
According to Chihiro, ZT Corporate provides full audited financial statements on each investment. Investors get extensive details on metrics like debt ratios, gross margins, revenues, and expenses.
Chihiro explains these certified financial documents are essential when selling companies generating tens or hundreds of millions in earnings. Institutional buyers like private equity firms require that level of due diligence before acquiring major portfolio assets.
For investors assessing opportunities, having transparent access to audited financials facilitates informed decisions based on the true fundamentals of each business. This reduces risk by moving beyond assumptions in Excel projections.
Targeting Distressed Commercial Real Estate
In addition to operating companies, ZT Corporate invests in commercial real estate like multifamily and hotels. Chihiro details their current strategy for finding discounted properties.
Rather than acquiring listed properties, they work directly with major banks holding distressed assets. These banks prioritize quick, confidential sales to qualified cash buyers.
By having funds readily available for acquisitions, ZT Corporate can purchase hotels and apartment communities well below market value. The banks avoid exposing losses by selling privately. Chihiro believes this opportunistic strategy has a short runway in the current market. As economic headwinds continue, more off-market real estate deals will come available before long-term investors re-enter the arena.
Learning the Right Lessons as an Investor
Passive investing always requires thorough vetting and due diligence. Chihiro shares a cautionary tale from one of his early private equity investments.
He invested in an oil and gas operator based solely on the positive experience of one acquaintance. In hindsight, Chihiro realized he should have consulted multiple individuals before committing capital.
By narrowly depending on limited information, he missed potential red flags and ended up with regret. Chihiro advises that investors always do extensive research before investing to ensure alignment with their goals.
His experience shows the value of leveraging a Community with diverse insights rather than making decisions in isolation. Thorough vetting protects against blind spots.
The Perks and Perils of Private Equity
For accredited investors comfortable with complexity, private equity can offer compelling opportunities not found in traditional stocks and bonds. But as Chihiro learned firsthand, private markets like real estate also necessitate more rigorous due diligence.
By providing full audited financials, experienced firms like ZT Corporate give investors the transparency needed to make informed decisions. This reduces risk and builds confidence.
From commercial real estate deals to car dealership acquisitions, Chihiro’s insights showcase the nuances of evaluating private equity investments. For investors willing to learn the ropes, partnering with reputable sponsors is the key to success.
Tap into the Collective Wisdom of the LFI Community
If you’re ready to move beyond traditional assets and access unique investment opportunities, it’s time to join the Left Field Investors Community.
As an LFI member, you’ll gain exclusive access to private commercial real estate deals vetted by experienced sponsors. But more importantly, you’ll have the support of a knowledgeable Community of fellow accredited investors who are navigating the same landscape.
Tapping into the collective wisdom of LFI members provides invaluable perspective when evaluating complex investments in spaces like private equity. You’ll be able to connect directly with fellow investors who’ve researched the same deals, sponsors, and asset classes.
Whether you’re a beginner seeking mentors or a seasoned pro looking to expand your network, LFI provides the Community you need to succeed. So don’t just go it alone – join a team that’s invested in your growth as a savvy passive investor.
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This article is for educational purposes only and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision. All investments involve the risk of loss, including the loss of principal. Past performance, and any performance results reflected in this article, is not an indication of future results.
