This article is sponsored by Taurus Investment Holdings.
What were your firm’s key events in 2022?
Taurus enjoyed a strong year in 2022, despite the extreme market turbulence. For Taurus, the first imperative as the market seized mid-year was to secure our existing positions and book what wins were still possible in a suddenly highly illiquid market. We acquired or recapitalized more than $1.3 billion in assets during the year, but like everybody else, we put things on hold for the most part after July. We did, however, close on a large build-to-rent scheme in the UK in December, so we did continue to find value even with the headwinds.
In terms of success, we secured several new institutional joint ventures in 2022 with Kayne Anderson, Aegon and TPG, which were all focused on real estate decarbonization efforts. We felt strongly that we needed to develop energy expertise in house to design and provide measurable value for our LPs, and created two energy affiliates, staffed entirely by energy experts: RENU Communities and EcoSmart Solution. Both work hand in hand with our real estate teams, a strategy that is going to have significant growth, particularly with the volatility we have seen in the energy markets.
What has the operating environment been like?
The operating environment was challenging but I have been through a number of crises throughout my career. They are all different but share similarities. The first thing you need to do is focus intensely on your existing book, look at your liability exposure and be prepared for any potential land mines that could go off within your business.
Cover the backside of your business and make sure you are in a defensible position. Our approach has been to prepare for a real estate correction period during which we can not only survive but thrive, focusing on the opportunities that will come from distress.
What key challenges did you have to overcome?
Having been through volatile cycles before, our decision was to wait and not change staffing levels because it’s difficult to find and train good people. We didn’t want to make any structural changes that would inhibit our ability to execute going forward. We focused on being prepared for the tightening cycle to be in position to take immediate advantage when that period ended. Now we’re transacting again.
Who or what is responsible for your success?
It is a team effort. I call our firm the “Taurus Family” and believe that a key part of the culture is ensuring people feel they are being respected and in the right position to excel. Allowing people to specialize in what they’re best at and tying them into their own success is the best way to maximize the future potential of our firm. I am proud of our group and how they work through good times and bad. We are well prepared when challenges arise and take them head on.
However, there are strategic initiatives that come from the top: we have a very tight investment committee requiring the unanimous approval of seven people. Getting a deal through that is challenging, so we have been disciplined. We also don’t do mezzanine financing, so we are not highly leveraged and almost never do CMBS borrowing. Dealing only with balance sheet lenders, while maintaining lots of cash availability, really puts us in a position where if something does go wrong, we can find a way through that pretty effectively.