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Young gun finds success comes naturally as market flourishes

Michael Lee is accustomed to getting a head start. A Long Island native, he grew up working on his family’s farm, which has been selling local and organic produce before that niche’ became trendy.

MICHAEL LEE
MICHAEL LEE

Now at 26, the Cornell grad has already made partner at HKS Capital Partners, a firm that he helped get off the ground immediately after graduating from college. Today he helps lead a team of 13 brokers.

Over the past four years, Lee has originated more than $450 million spread across 60 transactions. Marquee deals in his portfolio include a $30 million transaction to refinance a retail and office building on Fifth Avenue and three loans totaling $26 million for three brownstones on Manhattan’s Upper West Side.

“When I first came out of college, I didn’t really know what to expect,” Lee told Real Estate Weekly while discussing his efficient rise through the industry. “I always loved real estate and I was a business major,” he continued.

The general interest in the field and observations he made while growing up, helped lead Lee to the commercial mortgage origination realm.

“It always interested me because, in the agriculture business, you either own the land or you lease the land. The person who controls the land is the one that makes the decisions. They’re the one that can make the investment or make money. No matter what it is, whether it’s woods, raw land for farming or it’s a building or a hotel, it just was always interesting to me.”

“When I first met with (HKS co-founder Jerry Swartz), he basically told me that it’s a sink or swim business,” Lee continued. “You could be very successful, or you could fail miserably. Part of that actually made it attractive to me. I have nothing to lose and everything to gain.”

Lee didn’t waste time getting his feet wet. Though he was a 22-year-old rookie at an outfit that itself was only an eight-month old fledgling, he was hungry for his first deal.

“My first closing was about six months after I started. It was actually a construction loan, which most guys won’t do, or they can’t do,” Lee said.

“I got a taste of a little bit more structured deal, which helps with the more vanilla transactions,” Lee added, while recalling the transaction, which was a $2.6 million loan for a condo project in Prospect Heights. He labeled the deal as a “great learning experience” that gave him the confidence necessary to continue growing both his book and HKS.

“If I can do this loan — which fell apart three separate times — I can make it in this business,” Lee thought to himself.

While construction loans may not be every brokerage agency’s favorite transaction, Lee has grown quite comfortable with them.

“I think our niche’ is figuring out how to structure deals. In my eyes, even for permanent loans, there’s always some sort of structure that’s required,” Lee said before pegging construction loans like the one he made his debut with as about 30-40 percent of HKS’s business.

As 2015 comes to a close, the guaranteed reverberations of a booming 2014 theoretically can begin to grow duller. Will 2016 begin a plateau or decline in New York’s currently robust commercial market?

“I think it’s coming eventually, obviously,” said Lee while discussing the eventual bear stage of the cycle. “I don’t want to put any hard predictions on it, but I think it’s going to be a little bit more time. I think there’s at least a couple years left of a good market. If the rates go up, I think it will be a very slow and steady process, because the Government doesn’t want to blow any progress that has been made so far. In terms of deals, yes they’re expensive, but it’s expensive because everyone wants to be in New York. It’s an international market now. So even with these prices, guys are still buying, guys are still building.

“I think there will be a lot of business for 2016, “ he continued, “although it may slow down a little bit. I don’t foresee a real estate bust.”

Lee’s positive outlook for the future is shared by Swartz, who started HKS after the most recent dip because he still had faith in the market’s resiliency, despite the dark times of 2008 and 2009.
A seasoned veteran of the real estate world, Swartz saw something in the recent college graduate and entrusted him with helping to build his new enterprise in 2011. It appears to be one of the best decisions that he’s ever made. “He deserves to be a partner based on his production, based on the way he works and based on his ability to lead other.” said Swartz, who pointed out Lee’s dedication to his role, which includes late nights and the occasional weekend. “He oversees what the other brokers do. He’s a great trainer. He’s a very smart man.”

Lee himself said that he was flattered when he was asked to become a partner at the firm.
“It is very flattering to know that what you’re doing is valuable, so that was really important,” Lee said. “But I think it was a natural succession. I was already on board with running some of our budget internally and helping with the marketing and hiring.ˮ

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