Deborah Smith, Co-Founder and CEO, The CenterCap Group

Deborah Smith, Co-Founder and CEO of The CenterCap Group, a real estate focused boutique investment bank, embarked on an unconventional entrepreneurial journey, defying expectations shaped by her upbringing as a dairy farmer’s daughter in rural Australia. Balancing the demands of labour-intensive farm work and limited educational opportunities, responsibility became ingrained in her way of life. “As my parents used to say, ‘the cows don’t milk themselves’. But with the help of some incredible mentors along the way, it turns out I was destined for a different path than the one walked by my parents,” shares Ms. Smith.

Despite initially envisioning a career in tax law after graduating from university, she found herself propelled into investment banking. Seizing an opportunity at Morgan Stanley, an interviewer took a leap of faith in Ms. Smith, an Australian woman with no finance degree, hailing from an agricultural background, and sporting an ill-fitting suit. Life, however, had other plans in store. Ms. Smith recounts, “As life would have it, not only did investment banking turn out to be the right career, but it also helped me realize what I really loved – analytics, strategy, and problem-solving. This realization was somewhat the genesis behind CenterCap.”

Ms. Smith co-founded The CenterCap Group during the Global Financial Crisis of 2009, recognizing the deficiencies within the investment banking realm. “After working for many years at bulge bracket investment banks, my co-founder and I moved to CBREI Global Investors and became co-heads of their global M&A practice. Shortly after we started, we reviewed an asset portfolio that we ultimately decided to pass on. A colleague of ours then called us and said, “Welcome to the buy-side,” which taught us a lesson in transaction discipline and saying “no.” Not every transaction is a good one,” shares Ms. Smith.

Consequently, Ms. Smith’s perspective on the real estate sector underwent a profound transformation. Ms. Smith and her Co-Founder identified a notable gap in investment banking teams’ understanding of the industry, lacking the invaluable “boots on the ground” insights. This realization sparked the concept of establishing an investment bank rooted in a comprehensive understanding of the real estate sector, offering advisory services embedded with genuine and objective expertise and substance.

Exceeding Clients’ Expectations

At the heart of CenterCap’s ethos lies a straightforward philosophy – encompassing the entire real estate domain. From its inception, the company harnessed a vast reservoir of sector-specific knowledge, an extensive network of capital relationships, and a profound comprehension of both public and private markets. “Uniquely, we were independent with no research or trading capability and took no outside money. I think one of the reasons clients retain us is that our advice is based on sector knowledge of trends across the industry,” pinpoints Ms. Smith.

With thousands of relationships across the sector, CenterCap’s broad perspective resonates with its clientele. However, what differentiates the firm is its unwavering commitment to pursuing the right transactions rather than simply facilitating any transaction. This approach, though arduous, has been the cornerstone of CenterCap’s focus, and at times, it has meant delivering the straightforward advice of “No.” Ms. Smith adds, “We are free to take this path because we answer to no one but our clients. We garner a lifetime of trust for prioritizing our client’s interests.” Over the course of the firm’s history, CenterCap has faithfully executed its strategy, marking an extraordinary journey that has brought them to where they stand today.

In the face of market turbulence, CenterCap experienced a remarkably active year, completing approximately a dozen assignments in 2022. “Our firm’s strength lies in taking on off-the-runway or contrarian-style assignments. If we take on an assignment, it’s because we believe in the opportunity and are confident that we can get it done – we think our track record speaks for itself,” states Ms. Smith. In an industry where growth is a perpetual pursuit for most players, CenterCap assumes the role of C-Suite advisors, guiding executives to assess growth opportunities through the lenses of geography, product type, and capital flows. Organizations can chart their growth trajectory effectively by evaluating whether to expand geographical reach, incorporate complementary products, or enhance distribution channels.

The conversation surrounding growth becomes even more intriguing when technology enters the equation, influencing the quest for cost and revenue efficiencies. “When it comes to the types of transactions companies seek to pursue, we’re seeing more flexibility now than in the past. Historically, 100% change of ownership was much more common, but we’re seeing more minority sales, strategic alliances, partnerships, and joint ventures,” opines Ms. Smith. CenterCap encourages organizations to grasp the strategic rationale driving their actions, fostering a clear understanding of the available paths aligned with their key strategic elements. Recognizing that options abound, CenterCap emphasizes the importance of considering multiple avenues rather than settling for a singular approach.

Being Unique in the Realm of Investment Banking

CenterCap stands unrivaled among boutique investment banks, offering a distinctive approach that distinguishes them from their peers. “I don’t think there’s another boutique investment bank out there that does what we do quite, like we do it. Sure, we see other firms in one of our business lines or another, but we don’t see the same team executing on all of the services as we do,” claims Ms. Smith. With a profound understanding of the real estate and corporate sectors honed over its approximate 14-year existence, CenterCap surpasses other advisors in their depth and breadth of knowledge. Notably, their status as a women-owned real estate-focused investment bank further sets them apart, with no comparable institutions known to exist.

Throughout the pandemic, for instance, CenterCap successfully completed on a multitude of assignments, including within the retail and shared office spaces, demonstrating their ability to navigate challenging circumstances. Ms. Smith and her team have also proven themselves as leaders in incorporating technology into the real estate space and exploring supply-chain-oriented sectors like cold storage and logistics, as well as the intersection of infrastructure and real estate, as emerging cross-pollination trends are emerging. She explains, “We know the sector and are outspoken on what we think are the trends to watch – such as Industrial Outdoor Storage, Active Adult Living, the unique role insurance companies play in investment manager growth and the role private capital can play for public REITs.”

CenterCap’s profound industry knowledge translates into informed advice, allowing them to offer tailored guidance to operators, REITs, and investment managers seeking growth. Whether through strategic transactions, recaps, or a comprehensive suite of services, CenterCap equips companies with a full range of options to consider. Their guiding principle is to truly comprehend their clients’ operations, recognizing that effective advice hinges on a deep understanding of their client’s businesses. “We have the full suite of services to help companies think through their options. I always ask potential clients – how can an advisor give you advice if they really don’t understand what you do? That’s where we come in,” says Ms. Smith.

Overcoming the Entrepreneurial Challenges

Starting a business provides a wealth of wisdom across various domains, encompassing topics such as decision-making, strategies, and deal terms. The journey appears deceptively easy, but the reality is far more complex. Ms. Smith recounts, “It looks a lot easier than it is, for sure. For us, a couple of things were critical to our success. Firstly, being selective with respect to the clients and assignments we take on.” She takes pride in CenterCap’s remarkable track record of accomplishing its objectives, setting them apart from its counterparts. “If we don’t believe we can deliver, we tend to pass on it. Life is too short to do it any other way. Secondly, being adaptable is key,” says Ms. Smith.

Recognizing that change is beyond one’s control, entrepreneurs must learn to embrace the flow, step back, observe, and adjust their game plan accordingly. “Having a vision is a fantastic trait for an entrepreneur. However, tying yourself to what isn’t working, waiting for the world to adapt to you, may ultimately just result in failed dreams and an unsatisfactory ending,” opines Ms. Smith. Starting a women-owned investment bank, especially one focused on real estate during the Global Financial Crisis, was perceived by many as a daunting and unconventional undertaking. Given the industry’s predominantly male-dominated landscape, the number of women occupying C-suite executive positions remains small. However, Ms. Smith believes that CenterCap’s unique perspective brings something different to the table.

“Being an entrepreneur is hard work; not everyone is cut out for it – regardless of gender. I am not sure I would have started CenterCap or embarked on this journey if I didn’t have a great co-founder partner,” says Ms. Smith. As a women-led organization, CenterCap approaches its work with a deep sense of care, dedication, and a strong commitment to doing what suits its clients, leading to successful outcomes. The firm’s track record of achieving its goals is notably high, with repeat clients and referrals forming the backbone of its business. Ms. Smith explains, “Some of our clients we have been working with in some capacity for a decade. I get asked a lot how we did it, particularly as women – and my honest answer is by refusing to be told what can’t be done and only being interested in what can be done.”

Ms. Smith believes that women possess nurturing qualities and often tend to doubt their instincts and decisions, constantly second-guessing themselves. Drawing from her experience, she highlights the importance of trusting one’s instincts and avoiding the trap of second-guessing, as hindsight is always clearer. “Once you make a decision, don’t look back. If it turns out to be the wrong call, just trust that u will figure it out. Avoid the trap of second-guesses. Hindsight is always going to be twenty-twenty,” shares Ms. Smith. While nurturing qualities are often associated with women, she emphasizes the need for successful women to also possess the ability to make bold decisions and communicate with unwavering conviction.

Inspirational leaders understand that taking decisive action and trusting in their own abilities are key to success. “When faced with tough decisions, gather all the facts, seek input, and then make a choice without hesitation. These words of wisdom were imparted to me early on in my career by a female banker at Morgan Stanley who knew the value of making bold decisions and owning them. I have carried this advice with me throughout my journey. Never look back; what’s done is done,” explains Ms. Smith.

An Inspiring Women Leader

In defiance of societal expectations and preconceived notions, Ms. Smith has consistently charted her own path, refusing to subscribe to the idea that a woman can’t have it all simultaneously. “Society has a way of fostering an attitude that there is supposed to be an order of things – work, family, career. But I’ve never paid much attention to what others say I can and can’t have,” says Ms. Smith. The prescribed order of work, family, and career has never dictated her choices. Instead, she values the importance of balance, and for her, running plays a vital role in achieving it.

As an avid runner, she discovers tranquility in the rhythmic motion of putting one foot in front of the other on the pavement. During these moments, her mind finds clarity, often leading to profound insights without consciously seeking them. Ms. Smith shares, “Some of my best thinking comes when I’m not trying to think at all. Being a parent, a spouse, and having a career takes a lot of juggling and organization. It takes a village, an unwavering support network, and some give-and-take to make it all work.” She firmly believes in identifying her own desires and relentlessly pursuing them. While her schedule may be packed, she finds fulfillment in constant forward momentum. “I may not have much downtime, but that’s just the way I like it – constantly moving forward towards new goals and accomplishments,” says Ms. Smith.

As a passionate advocate for diversity in the workforce, Ms. Smith has long recognized that achieving genuine, lasting change goes beyond mere target-setting, training, and mentoring. She firmly believes that the key to creating a truly inclusive industry lies in raising awareness about its opportunities, starting at the college or even high school level. “It’s hard to level the playing field when the teams don’t have equal representation. I doubt anyone in our industry thinks they get as many applications and resumes from women and diverse candidates as they do from men,” says Ms. Smith.

Ms. Smith believes that the workplace benefits when teams are composed of individuals from diverse backgrounds. She observes, “There may be a perception that finance is a male-dominated field that isn’t welcoming towards women and other diverse candidates. But from my perspective of the inside, I don’t believe that’s not a universal view.” Throughout her career, Ms. Smith has been fortunate to have extraordinary colleagues, many of whom have been men, who have supported her success. “I’d like to see more diverse faces in our industry because diversity is healthy, and diversity of thought provides an extraordinary foundation to maximize value for any organization,” adds Ms. Smith.

Ms. Smith advocates for equal opportunities, empowerment, and evaluating individuals based on their capabilities rather than external factors. She emphasizes the importance of surrounding oneself with the best talent, as their expertise and contributions are vital in challenging times. Ms. Smith says, “There are a few things that are important to me – introspectively, they are rooted in my own career evolution – personal responsibility and accountability, meritocracy, and teamwork. CenterCap is an advertisement for these three cornerstones, and all three are tied together.”

At CenterCap, intelligent and capable individuals form the company’s foundation, driving its strength and power. Alongside personal responsibility, Ms. Smith values the concept of accountability, which she learned as a junior banker. She firmly believes that each person is responsible for their own career and should take ownership of their actions and decisions. This principle guides her approach to work and life. Additionally, Ms. Smith emphasizes the significance of teamwork, drawing inspiration from team sports. Understanding that a team is only as strong as its weakest member, she highlights the importance of effective communication, shared goals, and productive collaboration to achieve collective success. Through personal responsibility, meritocracy, and teamwork, Ms. Smith strives to foster a culture of excellence and achievement within CenterCap.

Moving Forward with Confidence

Today, Ms. Smith understands the importance of distinguishing between open and closed doors in life. She believes that success hinges on being open to new ideas and approaches, maintaining intellectual curiosity, and anticipating future possibilities. CenterCap’s success is attributed to its thoughtful approach to selecting clients and opportunities. While their track record in getting things done is impressive, Ms. Smith emphasizes the need for discipline in choosing the right opportunities to pursue. She pinpoints, “You can’t chase down every deal opportunity that comes your way. Instead, you must focus on maximizing risk-adjusted returns and ensuring that you can be successful.”

As an independent firm, CenterCap’s value proposition is centered on providing superior advice that is more insightful and valuable than its competitors. By maintaining a discerning approach and delivering exceptional advice, CenterCap sets itself apart in the industry. “We’re on a mission to be the top middle market investment banking advisor, the best at every service we offer. Our uniqueness lies in the fact that there isn’t another firm out there that does what we do,” claims Ms. Smith. The previous year was marked by significant growth and success, and the company is enthusiastic about the opportunities that lie ahead in 2023 and beyond.

While continuing to expand its existing business segments, CenterCap is also venturing into a new area: making principal investments. Recognizing their strength in underwriting promising management teams and opportunities, they are exploring early-stage investments, an avenue they have not extensively pursued. This expansion into new territory is exciting and a testament to their commitment to pushing boundaries and seeking new growth opportunities.

“Our firm is always juggling multiple projects simultaneously. From advising companies on corporate M&A to exploring capital-raising opportunities within the real estate industry, we are constantly busy,” shares Ms. Smith. Leveraging its expertise in underwriting people and opportunities, CenterCap aims to provide value and support the growth journey of these young companies. “It’s been an exciting new avenue for us, and we thoroughly enjoy it. However, our ultimate goal is always to create a trusted advisor relationship with our clients and build long-term partnerships based on mutual success,” concludes Ms. Smith.

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