Jason C. Smith
Jason C. Smith is the president and managing partner of M.M. Smith & Partners, LLC, headquartered in Pittsburgh, Pennsylvania. M.M. Smith & Partners is the general partner to a private equity real estate partnership, The Meraki Partners Fund, L.P. Founded earlier this year by Jason and his partner; the up-and-coming company is a niche commercial, multifamily fund focused on finding hidden gem properties and generating superior returns for investors over the long term. On their current project, where rents were significantly below market rates, they have been able to increase rent by 60-70% while increasing the project’s ROI by 35%. Prior to the COVID pandemic, the fund is over 15% subscribed; the first fund will be capped at $20 million, which should enable them to purchase $70 - $100 million (70-80% LTV) in real estate, targeting specifically value-add properties.
Jason founded M.M. Smith & Partners after a successful career that saw him win awards as both a patent examiner and an asset manager. Earlier in his career, as a primary patent examiner for the United States Patent and Trademark Office (USPTO), where he specialized in the railway/transportation sector, he received the Bronze Medal Award from the Department of Commerce—the highest honor given at the USPTO received by less than 5% of the employees. Later, his passion and skill for finance and investing earned him the Top Advisor Award from AIG, where he worked in asset management from 2012 to 2017, consistently ranking among the top 10% of advisors in the country. We sat down with Jason to learn more about M.M. Smith & Partners and the path that led him to join his engineering expertise and financial savvy to start this thriving new company.
Let’s begin with a bit more about your background. Tell us about the start of your career.
I graduated from the University of Pittsburgh with a B.S. in civil engineering and started my career at a geotechnical engineering firm in Miami, Florida, which designed foundations for many of the luxury condos built in the early 2000s. I then accepted a position in Washington, D.C., with an engineering firm contracted by FEMA to approve plans for flood mapping in new developments. Three years later, in 2007, I was given the opportunity to work for the U.S. government in the Patent Trademark Office, which had the largest telework workforce in the nation. I remained there for several years, working mainly in the mechanical division, but after passing the patent bar exam to become a registered patent agent, I decided to return to Miami.
Is this where you got into financial sales?
Yes, in Miami, I accepted a position with AIG, so I was juggling two full-time careers—selling financial investment products during the day and doing patent work at night and on weekends. This was when I discovered my passion for finance. I saw a different side of finance that involved analyzing the products that we were selling, and I learned what drives stock and asset prices. I fell in love with investment valuation and began buying books on security analysis, valuation, and finance. They all resonated with me, and I realized that I could combine my engineering background with finance.
How did you go about combining your two passions?
I enrolled in Florida Atlantic University’s financial analyst program. While there, a professor saw my passion and mentored me. He taught me everything, including how to understand different valuation models and the prices of stocks and assets. Since my goal was to transition from financial sales to the analytical side of finance, he referred me to a hedge fund in Florida, which focused on small-cap value investing with activism in their strategy. I learned a ton during my three years there.
When did you return to Pittsburgh?
After meeting my wife, I applied to the NYU Stern School of Business. We found out we were pregnant during the application process, and I almost gave up on applying. However, she pushed me to continue with my dreams. Shortly after graduating with my MBA, I decided to leave the hedge fund and start my own private equity investment firm with a similar strategy in real estate. After ten years in Florida and with a pregnant wife, it was time to go back home to Pittsburgh. We moved back and hit the ground running.
Tell us about M.M. Smith & Partners.
We currently specialize in commercial and multifamily real estate. My partner and I focus on older urban/suburban areas with apartment complexes that need a lot of work because there is a ton of margin in those projects. We target value-added real estate investments valued below intrinsic value with a built-in margin of safety. We then reposition our owned properties to increase competitive appeal to expand demographics while implementing innovative plans and systems to improve operating efficiency, such as marketing and property management. What does this mean? It means we are seeking undervalued cash flow positive real estate investment properties, where the value we create will increase rents and generate a higher valuation.
In terms of the fund, we keep our fee structure light to deliver better returns for our investors. Our investment objective is to seek long-term capital appreciation proportional to reasonable risk. On top of that, we leverage our relationships within communities to attract more investors, to raise more capital, and to find bigger and better projects.
What sets your company apart from other real estate firms and larger investment funds?
We know the Pittsburgh area well and have a lot of ties and relationships within the community. Our own personal capital is also tied to the projects, and we personally guarantee each project. Our investors, or partners as we like to refer to them, are only liable for the equity they put into the deal; they are not liable for any of the loans or financing on any deals. Their liability is capped where ours is unlimited. Because there aren’t many institutional investors concentrating in the Pittsburgh area, you can still find 7-9 cap rates in the multifamily space when the national average is 5%. Pittsburgh is currently the third-largest growing tech city, in terms of jobs, in the country, which also drives the area. In addition, many real estate investors and portfolio managers outsource work on their projects while we try to keep everything in-house. As we move forward, we want to vertically integrate to keep our costs down. Instead of paying a property management company 10% of our revenue, we will keep the costs fixed and hire someone from within. My partner’s family comes from the construction industry, so we try and leverage that to get great deals on some of our other costs as well.
What is in the future for M.M. Smith & Partners?
We are confident with the capital we have raised, but we are looking forward to getting in front of more people. It has been difficult with COVID, but we’re happy with our success so far and with the partners who remain committed to our firm. It speaks volumes about our ability, and the confidence people have in us.
Contact:
Jason C. Smith
President and Managing Partner
M.M. Smith & Partners, L.L.C.
The Meraki Partners Fund, L.P.
301 Grant Street, Suite 4300 │Pittsburgh, PA 15219
333 S. E. 2nd Ave., Suite 2000 │Miami, FL 33131
website: www.mmsmithpartners.com
LinkedIn: Jason Smith