FSO Capital Partners

Founded in 2019, FSO Capital Partners (FSO) is a real estate private equity firm that focuses on identifying and acquiring undervalued assets and driving operational excellence. To do this, they employ a disciplined acquisition approach with strict investment criteria.

As of March 2022, FSO has assembled a portfolio of 850 units in Arizona spread across more than 700,000 square feet and worth an estimated $200-plus million.

Their focus on the Arizona market and deep relationships with brokers, property managers, and owners around the state allow them to consistently source and more efficiently manage unique assets with a hands-on approach creating better outcomes for their investors.

Like many lean and growing CRE firms, FSO Principal and Co-Founder John Falkner and his partners wanted help staying on top of all the work it requires to run a successful business. “There’s so much that goes into it—finding new investors, managing distributions, raising capital, finding new deals, overseeing the subscription process, getting investors to execute documents in a timely manner—that you really need to focus your efforts,” says Falkner.

He continues, “At FSO, we were tracking everything on Excel spreadsheets and handling our communications via email, all while trying to maintain and grow relationships with a large group of investors. Almost everything was done manually and we knew that, in order to scale efficiently, we were either going to have to hire several finance and IR professionals or find a partner that could manage some of the accounting and more administrative tasks.”

FSO had a good idea of what they needed. “We wanted help with the subscription process, which without automation was really burdensome. Another important criteria for us was waterfall distributions. We also wanted a user-friendly way to store all our investor and investment data on a platform that was readily accessible to all our investors,” Falkner says.

They elected to bring in third-party experts. Falkner explains, “We decided that hiring a reputable administrator was a great way to scale without hiring multiple employees and bringing on too much overhead. It was a matter of scaling our operations so we could continue to accommodate rapid growth. We quickly went from 20 to 200-plus investors, so it would have been a real challenge to do what we’re doing without a solution like Juniper Square. But it would be equally beneficial if we only had 50 investors.”

John originally heard about Juniper Square from Chris Powers at Fort Capital. Falkner says, “We had been evaluating some of Juniper Square’s competitors, but none of them offered what we needed—investor-focused administration backed by technology. Chris suggested we look at Juniper Square and, when we spoke to a few more firms in the industry, we heard overwhelmingly that Juniper Square was the way to go.”

FSO took the evaluation process seriously. “Our software costs were minimal so we were very thorough in the research that we did leading up to selecting Juniper Square. In some ways, it’s a leap of faith. You can watch demos and spend time with the sales people, but you don’t really know how seamless that transition is going to be until you do it. We did as much research as we could, and then we took the leap—and we’re really happy we did.”

Falkner says making the move to Juniper Square was straightforward and uncomplicated. “The Juniper Square team did a great job of making that transition seamless. When we have a new deal, we send out our operating agreements to the Juniper Square team, they read through it and input all the waterfall distributions into the software. From there, we check it on a quarterly basis, but we just have to give Juniper Square our net distribution number and the software does the rest, distributing money according to the waterfall splits. We approve it and those ACH batch files get uploaded to our bank by the Juniper Square team. We approve those ACH transactions and they get distributed out. It’s almost like magic compared to what we were doing before sending out checks manually. Now we’re making more than 500 individual distributions on a quarterly basis—and we’re able to do it with a few clicks of a button. Previously, we had someone full time just writing checks and keeping track of the accounting. It would be an impossibility to do what we’re doing today without bringing on additional staff. It’s not just more efficient, it’s incredibly easy, too.”

FSO has been working with Juniper Square Administration for more than a year now. “It’s hard to imagine the days before Juniper Square,” John says. “Partnering with Juniper Square made it more seamless to raise funds and communicate with our investors, whether it’s sending out a quick update or quarterly updates and distribution notices.”

John continues, “Before Juniper Square, it was a challenge to send out an email to a large group of people or a targeted group. Now we can tailor communications to our investors. It’s easy to pull up an investor and see exactly what deals they’re invested in and what size distribution they received last quarter. Our investors can do the same thing. They can log into the investor portal and see every deal they’ve ever done with us and how each of those deals are performing. We can get a snapshot of any investor or investment anytime."

Falkner concludes, “We were tracking different investors and the amounts people wanted to contribute into our deals on Excel spreadsheets for each new equity raise. It would get messy because there were three of us raising funds. Calculations and quarterly distributions that we were doing manually are automated within the Juniper Square system and they’re accurate. We knew we needed a better solution, and Juniper Square delivered.”

Metrics as of 5/1/2022