Exclusive Q&A: Cypress Equity CEO Michael Sorochinsky On The Future Of Multifamily Development
Jan. 28, 2016, By: Karen Jordan, Bisnow, LA
Through his career in law, Cypress Equity Investments CEO Michael Sorochinsky developed a great understanding of real estate. And now, he’s turned that into a career in the industry, with a partnership list that’s a who’s who of commercial real estate. We chatted this week with Michael, who’s among the all-star panelists at Bisnow’s LA Multifamily and Mixed-Use Forum, Feb. 24, at the Montage Beverly Hills.
Bisnow: Why did you stop practicing law? Michael Sorochinsky: In my legal practice, I learned a lot about real estate, representing both lenders and borrowers in distressed real estate situations from the savings & loan crisis in the early ’90s through a recovering real estate market in the late ’90s. While the practice of law was intellectually rewarding, it did not fulfill my entrepreneurial goals. Running Cypress Equity Investments allows me to use my dealmaking and legal skills in a vibrant entrepreneurial setting. Toward the end of my legal career, I was just bored—going through the motions. Now, I wake up every morning and can’t wait for the day to start.
Bisnow: What has been the strategy for your company? Michael Sorochinsky: Cypress prides itself on making opportunistic investments in prime locations around the country (primarily the top 10 MSAs) in quality product, with the focus on Class-A multifamily developments. Locally, we develop and acquire our own deals. In other cities, we partner with best-in-class developers and operators.
Bisnow: Tell us about some of your other partnerships. Michael Sorochinsky: When the right opportunity presents itself, we partner with best-in-class developers in their local markets. Some of our strategic partnerships include: Century West Partners (LA), the Calida Group (Las Vegas), the Fifield Cos (Chicago), Magellan (Chicago), UAA (Portland), New Equities (LA), and other strategic partners in key cities around the country.
Bisnow: Tell us about Gibson Santa Monica. Michael Sorochinsky: The Gibson was Cypress’s first ground-up development site purchase in this cycle back in 2010 when few groups were considering ground-up development as a viable business plan. It has been a tremendous success, representing a prime example of modern luxury living in a relaxed Santa Monica environment—close to work, shopping, restaurants and public transportation. We’re very proud to say that nearly three-quarters of our residents either walk, bike or take public transportation to work.
Bisnow: There’s a lot of talk right now about the next recession and when it may come. What do you think the future of our industry looks like? Michael Sorochinsky: In our industry, we always need to adapt to the changes in the markets and adjust to the realities of the cycles. In the near-term, as we complete this mature cycle, we (and others) are focusing more and more on quality assets in core urban markets. We are also being more careful about our capital structures, gravitating toward longer-term hold strategies, as opposed to merchant-build capitalizations.
Bisnow: To what do you attribute your success? Michael Sorochinsky: A lot of hard work and focusing on the process. If you are good at what you do, and thoughtful about your overall business plans, you will generally get good results. Our track record and reputation in the real estate community has allowed us to expand relationships with our existing co-development and equity partners, as well as our lenders.
Bisnow: Outside of work, what kinds of things do you like to do in your personal life? Michael Sorochinsky: I have a passion for travel, particularly with family and friends. Whether skiing in Colorado or Utah, lounging on the beaches of Bali, Australia or Hawaii, boating in southern Italy and France, or navigating the density of China, our family is always on the move. I love flying small airplanes (honing my piloting skills), sailing boats, driving cars—fast…pretty much any machine that allows me to travel. I’m a basketball fan—and yes (painfully) still a Lakers fan. But most importantly, I really get a kick out of spending quality time with my family and friends.