We recently sat down with Focus' CFO, Diego Bullón to discuss his role at Focus, his experience in the commercial real estate industry and his thoughts on the recession triggered by the global Covid-19 pandemic. As a 20-year veteran of the finance and CRE industries his perspective is unique.
Tell us about your role as the CFO at Focus.
I am primarily responsible for Focus’s financial and risk management operations, which involves developing and executing a financial strategy, measuring results and maintaining oversight over our control functions. More specifically, I work with Focus’s management team on strategic matters, oversee the Accounting team and risk administrator, which includes delivering accurate financial information on a timely basis for over twenty entities and I am the primary contact for many of our financing and banking relationships.
Before coming to Focus, you spent time working with several other big names in the Chicago CRE industry, what do you think draws you to real estate in particular?
I have been fortunate throughout my career to see several different aspects within the real estate industry including a company primarily devoted to managing equity investments in real estate, a commercial real estate development company that offered a gamut of services including property management, leasing and even legal services and now to a development and construction company. For me, I have always enjoyed having the opportunity to learn and understand new and different facets of the real estate industry. I also truly enjoy watching how quickly a project can go from an idea to a fully executed development and how many details are involved in executing that, not just from a design standpoint but also all the machinations involved in securing equity and financing, negotiating terms with partners, establishing the appropriate legal structure, finding and capitalizing on incentives… the list goes on.
Focus manages all the accounting duties for their own development projects, talk to us about the benefits of integrated accounting services within a CRE organization.
Easy access to communication is the most beneficial aspect of having integrated accounting services. If the accounting team has a question regarding a development or construction issue, or vice versa, our teams are merely steps away from one another to discuss and resolve those questions. The proximity leads to more efficient problem solving and thorough discussions on issues. Even though we’re working remotely, I still see that occurring as the team throughout the company have established the rapport needed to quickly remedy issues as they arise.
Covid-19 has created an unprecedented amount of insecurity. As someone who worked in the CRE industry during the 2008 recession how do you think the recession spurred by the pandemic will compare to the recession driven by mortgage backed securities?
Uncertainty about the future is a similarity exhibited between the 2008 recession and the current one, which applies to both businesses and within and outside of the real estate industry. The uncertainty regarding the near-term and long-term future is a significant cause of the capital markets to come to an abrupt halt currently, which was also a reason the same took place in 2008. The other similarity I will note within the real estate industry is pivoting attention back to investments already within a portfolio and protecting the value of those assets.
However, in 2008, the banking industry was teetering on edge of collapse whereas today, that does not seem to be an issue as leaders of banks have discussed the steps they have taken to fortify their balance sheets mainly as a result of the events of the prior recession. Additionally, whereas businesses, particularly in the real estate industry, did not know how long the lending industry would take to recover in 2008, there is more optimism currently regarding a short-term rebound. The question business owners, equity providers and lenders are attempting to answer is how does that rebound look like, how quickly it will occur, what to expect in the future regarding a potential reoccurrence of COVID-19 and what will “normalcy” look like once we receive guidance about opening the economy while maintaining safety for society.
Another large difference between the 2008 recession and this one is that the 2008 recession took place over time whereas this one has been abrupt. Many commercial activities – travel, dining, shopping, etc. – stopped suddenly resulting in an immediate cessation of cash flow for many businesses and individuals. Unfortunately, this has caused many people to become unemployed all at once as we have noted in the tremendous spikes in the claims for unemployment seen nationwide. I suspect we will also see a significant spike in bankruptcy claims once the courts are functioning regularly.