Exclusive Q&A: Swig Co's Ken Perry on Expanding Portfolio

The Swig Co takes a long-term investment view, but operates in a manner that lets it make decisions quickly, taking advantage of opportunities as they arise in the supply-constrained markets where the company likes to operate. At the end of last year, the local firm sped in to buy the Wakefield Building in Uptown Oakland (which hit 100% occupancy in May); also in May, it was part of a JV that bought a 22-story office tower at 6300 Wilshire in Los Angeles. The company portfolio now includes 8M SF of institutional quality buildings primarily in three markets: New York, San Francisco and Los Angeles. 

Swig CEO Ken Perry (here in the company's new offices on the ninth floor of 220 Montgomery, above) took a few minutes to share his vision for the company with us, discuss the San Francisco market, and talk about the importance of community for the business and in his own life.

Bisnow: When you were promoted to CEO in 2014, was there any change of direction you wanted to see for the company or any areas of business you wanted to focus on more?

Ken Perry: I would not characterize it as a change in direction—we enjoyed a very positive growth trend for many years under the leadership of Jeanne Myerson, and certainly we hope to continue along that path. We are investigating an expansion of our investment portfolio to include commercial properties other than our traditional urban office assets, in consideration of some level of investment diversity. However, our greatest emphasis today is the continuing investment in our existing portfolio—in capital projects and in the incorporation of new technologies and working habits. As a long-term investor, we are keenly focused on keeping our properties relevant and attractive in the marketplace today and in the future.

Bisnow: You've bought and sold a lot of space in San Francisco. What have been the main factors in determining what you've kept and what you've sold?

Ken Perry: Over the years we have been a net buyer in the Bay Area. We believe in the strength of this economy, both near-term and long-term. And, of course, we are based here. A decision to sell may be based on several factors: completion of a value-add program, the investment horizon of an equity partner, or simply believing there is more potential value creation in another opportunity. Our view is that the hold period for any given investment is determined by a combination of factors; as a result we are not strictly constrained by defined hold periods.

Bisnow: What do you see happening in the San Francisco market right now?

Ken Perry: Obviously the market is incredibly strong. Some of the best opportunities lie within our existing portfolio, where we can complete projects to upgrade or expand existing properties and benefit from the current market conditions. The record levels for investments and leases induce a certain sense of caution with respect to new investments, however we believe there are still pockets of good opportunity related to very specific micro-markets and/or specific properties.

Bisnow: You describe the Swig Co as "nimble" and "quick" to take advantage of opportunities. What allows the company to respond quickly to change?

Ken Perry: Our organization is very flat, and our senior management team has long tenure working together, which benefits decision making. We communicate frequently with our owners and partners, and there is a great deal of trust underlying those relationships, which allows us to quickly respond to changes and opportunities. Having said that, it is also true that we recognize the value of a long-term perspective, and we believe that perspective is equally responsible for the success of this company over generations. (Pictured: Ryan Venezia and Seth Siegel of Cushman & Wakefield meet with Ken and Swig EVP of investments Tomas Schoenberg in the company's new boardroom at 200 Montgomery.)

Bisnow: What insights have you taken from those properties to drive other acquisitions?

Ken Perry: Everyone does well in up markets. Where the differentiation can occur is when markets are down. We stick to principles of lower leverage, higher occupancy, quality of the rent roll, and effective operational initiatives. In terms of new acquisitions, we prefer urban environments with good transit access.

Bisnow: Swig has a commitment to community. What keeps you, as an individual, most active in your local community?

Ken Perry: Several years ago, I served a term on my local public school system board, and I have been involved to some degree with several business/community organizations. But what I am most proud of is the commitment of our company, and many of our employees, to community involvement and activities. We encourage our colleagues to seek out those situations that involve helping others and improving our communities. A philanthropic sensibility is an underlying trait of our ownership, and each of us here at the company benefit from and endorse that philosophy.