Q&A with Stephen Alter, CEO, Real Capital Markets

In an increasingly virtual world, Carlsbad, Calif.-based RealCapitalMarkets.com stands out as the country’s biggest “virtual matchmaker” of commercial real estate dealmakers. The online service, which pairs up buyers and sellers of properties in excess of $10 million in highly secure ‘virtual deal rooms,’ facilitated well over a quarter of all U.S. sales in that lofty price range in 2006, reports New York-based Real Capital Analytics.

Heading the firm is Stephen Alter, a licensed real estate broker who spent two decades in real estate finance as an acquisitions officer for JMB Institutional, Heitman and Fairfield Residential before co-launching the company in 2000. In November 2005, Inc magazine named Alter’s firm as one of the fastest-growing private companies in America thanks to 305% sales growth during the preceding 12-month period.

Today’s brisk investment climate has spurred Real Capital Markets’ rapid expansion.

NREI: Tell us about your products and your market.

Alter: We innovated the idea of running private and confidential real estate transactions online. Our company produces what we call executive summary teasers on behalf of sellers, which are attractive, custom-built [property] presentations that look like mini Web sites. Then we provide secure virtual deal rooms, or ‘war rooms,’ that manage and distribute all the due-diligence, underwriting and pricing material involved with an asset sale. But our “special sauce,” if you will, is our qualified principal database, which provides the most complete qualified-buyer database in existence for commercial real estate.

NREI: You emphasize the term “qualified.” What sets your buyer and seller database apart from others in this respect?

Alter: We’re dead serious about keeping our database of principals as pure and up-to-date as possible. Anyone who registers with us and marks themselves as a principal must provide proof of their status, and show what properties they've either bought or sold recently. Otherwise your four-year old daughter could click on, say she was a CBD office buyer, then start getting submitted properties in the next few days.

NREI: You’ve said you’re the primary third-party independent to focus on this $10 million-plus sales segment?

Alter: Yes we are. It’s in the best interest of both the investor and the owner to have an independent third-party who doesn’t participate in the transaction and get a commission. This way, investors aren’t going to be steered to certain brokers. Before we came to be, you couldn’t log on as a disposition officer to see how the broker was doing on your deal and who the top horses were. You had to wait. There was no verification and little accountability. Now you can have the confidence that brokers have shown your deal to everyone and that they’re fairly marketing your property.

NREI: How can you help a typical broker/seller who is marketing a property?

Alter: First, our customers want to make a real statement. They send us their content, map, an aerial, subject line and we do their presentation well and fast. It’s like selling a house. You have to have curb appeal — and we specialize in digital curb appeal. Then the seller and broker can rely on us to pull up at least 1,000 qualified buyers and broadcast their deal quickly to a carefully targeted market. If it’s a hotel, we’ll broadcast it to the top hotel buyers, if it’s self-storage, we’ll find the top 1,000 buyers and so on. That’s much more effective than marketing to random commercial real estate people like others do. Investors are getting bombarded with solicitations, and you have to stand out.

NREI: How many transactions do you handle annually, and what’s the average cost?

Alter: We did 2,000 properties in 2005 and 3,300 in 2006. Our April this year was our biggest month ever. Our [per-transaction] services range between $3,500 and $4,500. Our database now has 26,000 qualified principals. Without question, it’s the biggest around.

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