Question and answer with Marilyn Kane and Sean Shanahan of Iridium Capital

Iridium Capital's managers, Marilyn Kane and Sean Shanahan, share some personal thoughts on why they initiated a real estate fund. NYREJ: When was Iridium Capital launched? Kane and Shanahan: Our investing operations started in October, 2010 NYREJ: I understand, Sean, you are California born and bred and studied finance and economics at Fordham University, and Marilyn you were born in New York, raised your family here and have had a successful commercial real estate brokerage firm since1990. What brought two such unlikely partners together? Shanahan: During the slowdown of 2008-9, it was difficult to find available finance positions, and I was looking to get back into real estate. Marilyn had just become a manager of the local Sperry Van Ness office (a national brokerage firm) which was founded by a high school friend of my father's, Rand Sperry. Rand made the introduction for me, and we immediately had a connection. The ideas using our skills beyond leasing and brokerage were flying!! NYREJ: What inspired you to start a fund? Kane: While working in commercial brokerage, many of our clients were looking to invest in real estate; however, they didn't have the financial capacity to purchase a commercial property on their own. We decided to create a vehicle in which investors could invest relatively modest amounts, pooling their money, and still get the returns, tax treatment, and diversification offered by real estate. NYREJ: How was it that you decided on focusing specifically on net leased properties? Shanahan: While there is plenty of money to be made in construction and re-development, our investors were looking for consistency and staying power. The high profile of most net-lease tenants, coupled with the great structure of net-lease, allowed us to create a high return with low variables and with credit tenants with whom our investors could feel comfortable. Remember that in net leased properties, the tenant is paying for all taxes and insurance, and most important, in a true NNN (triple-net), all maintenance. This alleviates a lot of unknowns for an investor or landlord. NYREJ: What is so compelling to focus exclusively on net lease properties? Kane: We have found that by focusing exclusively on net-lease, we have been able to create long-term relationships with developers and lenders across the country, with a strict focus. This pairing has allowed us to create higher than market returns for our properties without becoming burdened with the hassles of development. In addition, our investors garner a return starting as soon as we acquire a property, rather than have a multi-year hold period that is required with development. NYREJ: What sectors of net leasing do you purchase? Shanahan: We have focused mainly on free-standing retail locations. However, as we have grown, we are starting to add properties in both the industrial and medical sectors. NYREJ: Why is that? Shanahan: By far, retail is the dominant force in net-lease. This allows us to scrub from a large pool of prospective investments. NYREJ: Since you are buying properties all over the country, how do you locate what is available? Kane: We have created a large network of preferred developers, REITs, and brokers who are much attuned to our specific investment requirements. This allows us to by-pass a lot of noise in the market on properties that do not fit our structure. Most often the properties offered to us are off-market. NYREJ: Real estate is considered an alternative investment, which is something usually attractive for an IRA. Is one able to invest an IRA into your fund? Shanahan: Most definitely. The account within our fund would be one specifically for the IRA, and through a qualified intermediary, which keeps the integrity of the IRA intact; those monies can be invested into the fund. In these times of low bank interest rates, it is a particularly attractive vehicle for an IRA. NYREJ: What kind of growth have you had during the past year? Kane: In 2012, we acquired, internally and through joint-ventures, approximately $15 million of real estate across 11 properties. NYREJ: What is your anticipated growth for 2013? Kane: We are aiming to acquire roughly 30 properties this year for an aggregate of around $50 million. NYREJ: How will you achieve that? Shanahan: We are leveraging our JV partners as well as increasing our investor base. Now that we have created a larger, more mature, and stable portfolio, we are starting to bring in institutional-type investors. NYREJ: Sounds like a solid plan. we look forward to watching you both as you achieve your goals in the upcoming year. Marilyn Kane is the president and Sean Shanahan is the CFO at Iridium Capital, New York, N.Y.