Primed for growth, Don Braun discusses what’s next for Hall Structured Finance

Featured in the Dallas Business Journal:

It’s been nearly 40 years since Don Braun moved to Dallas as Hall Group uprooted and shifted its headquarters from Michigan in 1983.

Beyond its core competency of real estate, the firm has seen different iterations through the decades with investments into wine (of course), oil and gas, software, technology and venture and private equity.

It’s an enviable variety that not many see after sticking with the same organization for as long as Braun has, and it’s also a large piece of why he’s been with Hall as long as he has.

“I’ve been fortunate that opportunities kept coming to do different things literally across the globe. I’ve traveled all across the world with Craig Hall doing different types of business outside of solely real estate,” he said in a recent interview.

In his current role, Braun serves as president of Hall Group and its subsidiary Hall Structured Finance.

Excitement is a keyword for Hall Structure Finance in particular as the arm, honed in on debt financing in multifamily and hospitality, eyes opportunities ahead.

As of late, the private lender has nearly tripled in size by headcount. Momentum is only set to build as HSF plans to do more than $600 million in loans this year and continues to see demand.

Braun spoke more about HSF’s push into 2022, the long-term transformation of Hall Park in Frisco and more:

HSF is seeing incredible volume and growth in its business. Where is that success coming from? 

For HSF and that business within the Hall Group, there are a number of contributing factors. HSF provides construction loans primarily to the hospitality and multifamily sectors and also bridge loans to existing assets in the hotel sector. The group has executed in this world for more than 20 years now in terms of our business. Over time, we have been through multiple cycles of ups and downs, particularly in the hospitality sector, if you think about 2000, 2008 and the Great Recession, and the Covid pandemic. All through, HSF has performed very, very well.

As people look at what we’ve done, we’ve done it through multiple cycles and we’ve done it in a stable and predictable manner so people can count on us. Also, our own portfolios perform very well. Increasingly we’re more confident and more anxious to deploy capital in the structured finance area.

With something like shelter-in-place and the pandemic in 2020, we’ve never quite seen anything like that in our lifetimes. I would think that based on your experience that you were able to look at the lay of the land, take a step back, take a deep breath and then keep working and pushing on vs. folks who panicked.

At the onset of the pandemic, we took our experience from prior cycles and we executed based on that, understanding that at that point internally we had to circle the wagons and make sure that all of our resources, all of our capital, was secure and to aggregate as much capital as we could. That was based on having gone through a number of cycles previously.

Thereafter, we went into a mode of working with our borrowers. At that point for them, particularly those in the hospitality sector, it was pretty unprecedented. The end result has been that, yes, we had to provide some accommodations along the way, but the portfolio, the hotels and our borrowers performed as well as we could have ever guessed they would have.

When you’re able to make those concessions and work with people in uncertain times, is that why they trust you in the first place?

Since we’re on both sides as borrowers and lenders, we understood that communication was the key. Our borrowers needed to communicate with us, and we needed to communicate with them. Even if the borrower didn’t understand that was the key, we had to educate them that this is a two-way street. We’re going to communicate with each other and, through that, we’re able to work together.

Loans right now are gravitating more towards multifamily, but are y’all seeing that rebound on the loan side with hospitality? Or does it more depend on where an asset is located?

With new opportunities, we’re seeing about two-thirds hospitality and one-third multifamily. We continue to like the hospitality area – maybe even a little more than the overall markets – and it creates opportunity. For one, there are fewer people providing hospitality financing. Secondly, our experience has been that if you’re financing quality assets, that’s the most important thing at the end of the day. If you’re financing quality and hospitality projects, that’s going to bode well for you. By the same token, if you’re financing multifamily projects, they have to be quality projects.

The Sunbelt and southern U.S. and drive-to leisure markets have performed well, while some locations might cause hesitation. Are y’all seeing opportunities for quality investments there or in other markets?

We have a national platform, so we finance across the country, but the southeast and the southwest are preferential in a general sense. Leisure properties have done the best on the hospitality side because of the drive-to nature, particularly with people’s pent-up demand for vacations.

The group business will start to come back, particularly as companies want to make sure that their folks are getting together on a regular basis, whether it be in the office or by conference. We think there will be some opportunity there, and also with high-quality urban hotels for business travelers and the like.

Are there additional opportunities that you’re seeing? Is there anything surprising to you about the current climate?

We’re always talking about where we might see opportunity from the finance side and whether there are different product types we might be able to venture into. It always comes down to the fact that we’re always thinking about it, but at the end of the day, we want to finance most importantly what we understand. The shiny new penny out there might be great, but we still need to understand it.

We feel good about what we are financing and that we do understand it. There’s nothing specific we’re focused on. There are different ways of financing that we might look at, but I don’t see a different product type. In terms of surprises, there is a lot of uncertainty right now in different areas with where interest rates are going and inflation. Those things do impact us as we think about new financings in terms of where we hope to not get surprised, but we always are prepared to be surprised.

HSF has grown its employee base quickly, and it can be tricky to get new folks onboarded and up to speed with a company’s culture. What has helped with that? 

We have a very strong culture in terms of defining what this company is, how we are as people and how we treat associates and employees. When you bring people in, that becomes evident pretty quickly with how we operate. We’re extremely transparent and open with everybody at all levels. Nobody is sitting there thinking, ‘What are Craig and Don talking about behind a closed door?’ Whatever we’re talking about we’re more or less welcoming people to know and understand. That’s by the leadership of Craig as much as anything, and he’s been that way from the moment I met him.

The key is that we have a core group of people who have been with the company for a good long time. As we add new people, we’re able to leverage that core group of people. We have very little turnover, so we’re very fortunate that when we onboard people, it’s not like somebody else is leaving. We are onboarding to satisfy growth, not to bring in people to fill a revolving door.

I hear a lot about the challenges around hiring right now, but it’s also interesting when folks are able to find people that are a fit in this tight labor market, especially when it includes a growth story.

It’s a competitive world, but we’ve been fortunate in being able to build a quality team. Not only is culture important to all the professionals that we’re talking to, but also opportunity. If you’re growing, inevitably you know that brings opportunity. People are seeing it, and that’s why we’re able to attract talent.

You were with Hall for the first iteration of Hall Park in Frisco. Talk to me about the vision for what’s next.

Let’s call it transitional to transformational for what Hall Park is today. It’s changing and evolving from what we think is a splendid office-centric development that has lots of great attributes – the green space, the art, the amenities – and it’s being done in a forward-looking manner.

The market has been changing quickly, and we have been in design development on this since pre-Covid. The changes that we’re doing at Hall Park were conceived back in 2018 and before to a mixed-use, urban-suburban environment. We want to create an environment that provides all the amenities and mixed-use components that you think about, but that is one that embraces the entire community. We’re doing a large park, and that park is the central catalyst point for the transitional and transformational nature of making Hall Park not just a great place to work, but that you want to go enjoy it with your kids or your friends; to live there; or when friends come to visit, to stay at the hotel. It’s going to encompass all of that.

In your career, you’ve been able to forge new ground and build new things. Where does that drive come from for you?

I work with the master entrepreneur. If you ask Craig Hall to define himself, he’ll say first and foremost that he’s an entrepreneur and he supports entrepreneurs. It’s really how he thinks of what he does and how he does it

In the finance area too, we’re able to support entrepreneurs because a lot of the time we’re not financing the highest institutional-level borrowers. We’re financing people who are creating and executing what their dreams are. It extends all the way from our development team to our finance. What we are as a company and how we operate are so much a function of Craig and how he thinks about the world and the value of being an entrepreneur.

I’m not sure if lending gets enough credit for being as creative as I think it is.

People don’t necessarily think about it this way, but we think about it in terms of job creation. We are catalysts for thousands and thousands of jobs being created across the country. Part of our story is about being able to be supportive of entrepreneurs and also enable those dreams and visions to be created.

You can think about something as either a risk or an opportunity, and, when y’all see a good investment, it seems like y’all very much have the opportunity in mind and its potential.

We want to take the time to understand, analyze and certainly take the appropriate risk, but we also see the opportunity in everything that we do as well.

Is there a key lesson you’ve learned along the way that’s stuck with you? 

I wish I could tell you it was grander than it’s going to sound, but a key lesson is that details matter. In all the great things that you do and all the big visions, you’re trying to execute, details matter. For me personally, that’s the way I do things.

I do have to ask: Are you having fun right now? 

As long as I’ve worked in what I’m doing, you don’t do it unless you’re having fun. I assure you that. That is 100% what it is.

This interview has been edited for clarity and brevity.

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