Case Studies

Andrew is a college educated contractor who has, over the last decade, built his business from scratch into a thriving small business. He provides steady income for his staff of two dozen employees and contract workers, works hard every day, and brings home more income than he expected to make this early in his career.

Andrew is faced with financial planning needs – investment opportunities, retirement and tax planning challenges, questions about how to mitigate risks through insurance and savings. Most people who approach Andrew with solutions and opportunities are biased by personal interests (success fees and commissions) or have deep knowledge of narrow sectors but lack global perspective. Andrew is an excellent contractor but doubts his ability to navigate the complex world of opportunities and choices which face him as a result of his success.

Andrew became a client of Pebble Brook Financial and has since made several investments in real estate. He sought referrals to life and disability insurance professionals and utilized a referral to a stock trader who fit his risk profile and investment goals. After a business and risk consultation with Pebble Brook, Andrew started a merchandise wholesale business with two partners and has seen that business grow towards profitability without the need to devote significant time to this venture. Andrew has reviewed several additional investments with Pebble Brook and turned them down, benefiting from these practical case studies to better understand the evaluation and pursuit of future opportunities.

Opportunity Zone Development – A skilled real estate professional purchased 250 vacant boarded up apartments located on 8 acres in a high-crime urban area. After 3 years of negotiations with the City, he was told that the City would not support the renovation of the existing apartments and wished to see the existing structures demolished and new buildings erected. The professional believed that the neighborhood did not support rents that would justify ground-up construction, and the owner was concerned that his project had reached a dead-end.

The property is located in a Qualified Opportunity Zone, for which a complex series of incentives was created in 2017 to encourage development of new properties and businesses in low-income areas. Investors can defer or reduce federal income tax liabilities by investing into a Qualified Opportunity Zone Fund, and therefore they would invest in an Opportunity Zone deal at lower rates of return. Pebble Brook was hired to underwrite and analyze whether ground up construction of this particular property would be attractive to Opportunity Zone Fund investors.

Pebble Brook referred the client to an architect who generated a “massing study” which showed the property could support approximately 750-900 units. Pebble Brook underwrote the development of the property with various unit counts in 4-story wood-frame structures and developed an estimated project cost. Based on market rent and expense assumptions, pro formas were developed that showed what approvals and incentives would be required from the City in order to make the project viable. After consideration, the client agreed that this was the best path forward.

Pebble Brook referred the client to a skilled legal team who has engaged the City to negotiate the required conditions to facilitate a viable and profitable project.

The Goldberg Family ran a family business on a large industrial property in a major city for multiple generations. During this most recent market upswing, the family received an offer to sell its property to a multifamily developer. After the property was placed under contract, the family shut down its multi-generational business and made the initial steps towards retirement. The land parcels were sold, a 1031 Exchange was completed, and after a few years the family refinanced their investment properties and invested the cash into the markets. After decades running an operating business, the family now finds itself running a family office with financial assets.

Pebble Brook entered a retainer agreement to help the Goldberg Family manage its family office, under which Pebble Brook oversees the Company’s various real estate and securities investments. Pebble Brook works closely with members of the Family to manage lawyers, accountants, property managers, wealth managers, and all other third party professionals to ensure a smooth and effective operation of the Company. Pebble Brook prepares and reconciles the annual Company budget, recommends appropriate shareholder distributions, reviews new investment opportunities as they become available, and is the first phone call from 3rd party professionals on most day-to-day items. This arrangement allows the Goldberg family members to pursue their own goals and needs with confidence.

As a result of this relationship, the Goldberg Family members have a single address for information on the performance of the Company and its operations. Pebble Brook carries a fiduciary obligation to the Company and can be relied upon to advocate for the Company’s interests and pursue the best outcome. As the older generation shifts from retirement planning to estate planning needs, the current generation of shareholders can be confident that Pebble Brook remains engaged to provide a continuity of vision and execution.