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Posted Apr 17, 2023

Fundraiser Feature: Bryan Kelley at STNL Development

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Bryan Kelley, EVP, Chief Financial Officer and Principal at STNL Development

After only five years in business, STNL Development made the Deloitte Cincinnati 100 and Juniper Square’s Top Fundraisers lists for 2022. See what CFO/Principal Bryan Kelley had to say about the firm’s impressive growth and where they’re focusing their efforts in 2023.

Q: How did you get your start in real estate, and what led you to STNL?

A: When I was a college student, I took my first job with a public accounting firm whose focus was owner-managed companies. I had the opportunity to work across several industries, including banking and manufacturing, but commercial real estate and construction fueled my passion. After obtaining my CPA, I joined one of my clients, a commercial developer for restaurants and shopping centers. I spent the next 12 years as a controller for them and another real estate developer and general contractor in Cincinnati. I have always enjoyed the mix of different projects I found myself participating in. I love seeing a piece of raw land develop into a completed project that adds value to a community. And when the projects are in my own community, it’s rewarding to drive by them and know you had a big hand in their completion.

I’ve been with STNL for four years now. Even though the company is only five years old, we have 200 years of experience, thanks to the cumulative experience of our principals. Our co-founders, Dave and Chris, had an idea to build a development company that could be quick and nimble and leverage this combined experience to bring in friends-and-family investors nationwide. And that experience is what attracted me to come on board and help grow the business.

Q: What is STNL’s investing philosophy?

A: STNL stands for “single-tenant net leasing,” which is our core focus. We pursue retail, medical, and industrial projects, usually stand-alone buildings. We’ll search for a tenant first and take the lead from them—which markets are best for their goals? Do they need to relocate an existing facility or a completely new facility in a market they’re unfamiliar with? That’s where we've been able to help our tenants—finding them new locations and seeing them through the challenges of dealing with new municipalities, getting those cities to understand the value we’re bringing.

Q: To what do you attribute STNL’s fundraising success in 2022?

A: First, our investors like our investing model because it’s simple. We're not just buying land and then trying to find the tenant, we're selling a specific project. That allows us to be very specific about how long the lease is, where the piece of property is, and what the income stream and revenue stream will be. So, the variables are much less dynamic than in some of the bigger, more complex projects that are either multi-tenanted or a mix of office and retail. People can get their arms around this type of investment vehicle—and its risks—much more easily.

Second, our ownership group has a history and a track record of success—not only can we share the projects we've done in the past, but we also have those 200 years of combined experience, which gives people faith that they can trust us with their money. This isn't a perfect science. It’s one thing to invest your money in an offering, and it's another thing to invest it with people who you know can solve a problem and minimize your downside if something goes wrong. In other words, it's all good until it's not good. And when it's not good, you need people to work hard to find the best solutions possible to protect everybody's position.

Q: Do you expect it will be easier or harder to raise capital in 2023?

A: Capital doesn’t worry me just yet. Our investor base is still bullish on putting their money somewhere, and we’re still seeing a very strong appetite, even with all the headwinds of the second half of 2022. It's a little surprising but a good surprise because that means that people are in a good capital position.

And I’d say that's the biggest difference between the recession of 2008 and now; in 2008, there was a lot of very aggressive underwriting, which put the sponsors in trouble. But now, investors and projects are much better capitalized, so there has been balance in the nature of the deals that allows people to withstand some headwinds. That is why we’ve seen this more elongated continuation of real estate development. We’ll be closely watching the next three to six months to see what happens with interest rates and the economy. However, from a capital perspective, our investors still want more opportunities.

Q: What is STNL’s biggest priority for the coming year?

A: 2023 is focused on executing our pipeline and growing our lender network. Since our average project size is about $5 million to $10 million, we deal mostly with small to mid-size regional banks. But we also travel nationwide, which makes the smaller banks a little hesitant since they typically lend in their local markets. So, we must spend the extra time to allow them to get to know us—build connections and the relationships. You can't just expect to fly out there on a Monday and shake hands and get loan in a month. Helping lenders get to know us better is our priority for 2023. Then in 2024, we will work to execute fund number two.

Q: How has Juniper Square helped STNL succeed?

A: Previously, we were creating our own reporting and tracking, and it wasn't very efficient. So, the Juniper Square platform has been a big win for us. Our LPs love Juniper Square. They love access to the information without searching emails and files and wondering, “Where did I store that?” Being able to track all the distributions and the K1s for tax information—it does keep them organized without much effort. It’s been a key part of our ability to transform from a group just doing small, one-off offerings to where we are now.

Q: Do you have any advice for your younger self?

A: This industry, especially on the construction side, tends to be a traditional, old-school industry. But the older I get, the more I realize the importance of embracing change—especially regarding technology. COVID forced us to use technology in ways we didn’t even know was possible, and had I known, I would’ve taken that lesson much sooner.

STNL Development was featured as one of our 2022 Top Fundraisers, based on our analysis of the capital raised by our clients using Digital Subscriptions. Digital Subscriptions is of our digital fundraising tools available to GPs, helping them raise millions more in capital year-over-year.