Welcome everyone to episode 24 of Offshoot. My guest today is Jason Luker, a Principal and Founder of Cardinal Group which is a vertically integrated institutional asset manager and developer focused on student housing. From a 2006 start at zero, Jason and his three partners have absolutely crushed. They have 2,000 employees, 100,000 beds, and $2B of gross asset value under management. With a P.O. Box as an office and just the four founders, to this scale in 15 years is incredible. This is a unicorn in real estate operating companies.
Jason’s really open here and provides ton of dimension around the challenges of growing the company, institutional capital, entrepreneurship, and strategy.
This one’s a bit like hopping in the back of an F-14 with an ace pilot only to have him explain the instruments, the different maneuvers, and some of his past flights. Jason’s career and life are really on a roll and I think you’ll enjoy the unique perspective he offers.
Listen in as we cover topics that include:
Why listening to your dad’s advice for a career path isn’t always a bad idea.
How capital markets are starting to thaw, and the fact that real estate is beginning to trade more freely now.
How having kids changed his view of the world and his business.
How Jason started with almost nothing yet successfully pitched an equity group to support them on a $30MM acquisition and how conviction that they would be successful or die trying influenced that capital raise.
How Cardinal Group is organized and how they think about the sharing of internal resources and profitability within each of their operating companies.
Why being the employer of choice has been a coup for Cardinal Group, and why they invest heavily in operational improvements and HR with a focus on recruitment, training and retention.
How they think about culture, providing the opportunity to grow into any role within the organization as a competitive advantage.
The nature of their capital inflows from internal funds to programmatic LP vehicles and how they are structured.
How the pull back in office investing is pushing capital allocators into alternatives within the real estate sector like student housing, data centers, B2R, and outdoor storage.
How they get called, weekly, by groups wanting to acquire their platform.
How large allocators of LP capital think about, or prefer, investing in sector-specific platforms vs. investing in co-mingled, closed ended funds. As well as how those investors would like to put GP capital into those platforms to own part of the sponsorship.
How gaining scale brings more, better, and cheaper capital to the table.
How Cardinal looks to be the tip of the spear in terms of consolidating the fragmented student housing industry.
The fact that this entire enterprise was self-funded, and not from deep pockets.
How they manage the partnership with 3 principal’s votes, any one of which can veto and create a no.
How brining in an executive team really freed up the founders to grow the company even more, and how that was hard to do.
The fact that hiring is a crap shoot.
How culture was at the foundation of Cardinal Group’s formation; they spent a lot of time thinking about what the place would be, long before they grew.
The sacrifices that Jason made in his 20s and 30s to get here.
The fact that they’ve never lost money.
How having confidence that you’ll figure it out is essential. Know that you don’t know, but that you do know people who have the answer.
