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December 13, 2012

Real Estate Surveys: Talon Private Capital

Specialty: Real estate investment and portfolio management

Management: Bill Pollard, James Neal

Founded: 2009

Headquarters: Seattle

Current projects: 1800 Ninth Avenue; Archon portfolio (27 buildings in Seattle and Bellevue); Waterfront Place (Kirkland)

Photo courtesy of Talon Private Capital [enlarge]
Talon and Prudential last year paid $77 million for the 1800 Ninth Avenue building in Seattle.

Bill Pollard and James Neal have built a family business, in every way.

The long-time partners worked together for decades, even founding a real estate investment company together. But they wanted to have a little more skin in the game; they were ready to start investing their own money in real estate. So, in September 2009, they founded Talon Private Capital.

In its three years of existence, the company has grown from investing the founders’ money to 18 families in the Pacific Northwest and Germany. The philosophy stands apart from other investment companies because of this family culture.

“Unlike many investment firms who are interested in buying low and selling high, our primary impetus was to buy really high-quality real estate that we wanted to own for a very long time,” Pollard said. “We were only going to buy the best of the best.”

But Pollard and Neal are focusing on the best, on a budget. The company sticks to a price range of around $15 million to $40 million with a focus on office buildings.

The Archon portfolio

A second wing of the company, Talon Portfolio Services, has gotten the majority of the attention. Earlier this year it was appointed by the court to take over an aging 11-project, 27-building portfolio from Archon. Pollard said the buildings were 98 percent leased in 2006, and when Talon came in that number was 48 percent.

Tenants were in the middle of a mass exodus as the previous owners hadn’t invested in maintenance. Talon had to simultaneously fix up the buildings while convincing tenants not to leave. Pollard said this project is the focus of 11 of the company’s 18 employees, and that Talon employs pretty much every architect and construction manager in town at the moment.

Pollard said the job is long, but Talon has started to stem the tide of tenants leaving and the company has leased 300,000 square feet in the portfolio to new tenants.

Other markets

Pollard said the company is growing. It is close to making its first acquisition outside of the Puget Sound region, for a Class A office building in Dallas’ Uptown neighborhood. Pollard said Talon is looking to buy in Portland, San Francisco, Los Angeles, San Diego, Dallas and Austin, Texas.

As the business continues to grow, Pollard said the company’s two arms can work together to deliver a more attractive investment package.

“Our secret sauce is we have two parallel companies run by the same two guys, and we get the benefit of knowledge from the service company, and we apply it to our investments,” Pollard said. “At the end of the day it makes our investment company have a lower risk profile.”

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