By the time Andrew Farkas landed on MULTIFAMILY EXECUTIVE's debut cover in January 1996, he had already steered Insignia Financial Group to top spots on the National Multi Housing Council's lists of top 50 managers and top 50 owners—in a mere four years.
He built his New York-based company the old-fashioned way: through acquisitions. Between 1991 and 1995, Farkas went on a buying spree, picking up distressed real estate properties, including 30 major portfolios. And he didn't slow down on purchasing multi-family and commercial portfolios after he appeared on the MULTIFAMILY EXECUTIVE cover, either: Just two years later, Insignia owned approximately 350,000 apartment units and 400 million square feet of commercial and retail space.
By 1998, though, the Insignia empire had grown to such a level that property values and tax laws had become a challenge for the company. So Farkas broke it up, selling his multifamily portion to AIMCO. “We had created a tremendous amount of value in the portfolio,” Farkas says. “We had scale, we had equity, and it didn't look like the market conditions were going to change. It was the right time for us to execute an exit.”
He took a similar approach with other aspects of the business. In 2002, Insignia sold its New York City condo and co-op management business to Prudential and then, in 2003, its commercial property services business to CB Richard Ellis.
But CBRE didn't want it all. So Farkas formed a group to acquire the remaining hard assets of the portfolio—approximately 40 buildings with a total capitalization of $1.3 billion. “It gave us a platform to start a new business with, and it gave our shareholders [of Insignia] a little more value,” says Jim Aston, a minority owner in Insignia and Farkas' latest venture, Island Capital.
Island, which is based in New York, lives up to its name by focusing on maritime properties, which involves developing, acquiring, and operating marinas condos, and hotels. “He's got a view of the marina business in the Caribbean because of the number of boats over 1,000 feet that have been built over the past 10 years,” says Frank Garrison, principal and president of Overton Capital, a private investment and advisory firm in Nashville, and former president of Insignia Financial Services. “The marinas have not kept up and he's the first one doing it [building for these boats].”
Island also manages sub-investment mortgage grade funds and has started a joint venture with the United Arab Emirates government in Dubai to set up its secondary mortgage systems—effectively the Middle Eastern country's Fannie Mae or Freddie Mac. “Andrew has matured and continues to grow as a businessman. He's doing more complex things and has more confidence in what he's doing,” says friend and colleague Steve Ross, who is the founder, chairman, CEO, and managing general partner of The Related Cos. in New York.
While Farkas may be dealing with more complex issues, his team is still basically the same. “It's the same gang I founded Insignia with,” says the former MULTIFAMILY EXECUTIVE cover subject. “We continue to execute on the same strategies.”
So far those strategies haven't included returning to multifamily, but Farkas says that could change—given the right circumstances. What might those be? “I can't tell you that,” he says, “because that would be the formula to Coke.”