Quattro Development Welcomes Private Equity With New Friends and Family Fund

August 17, 2023

Real estate developers often rely on private equity and outside investors to finance their projects. That’s the case for Quattro Development, a small but growing real estate development firm based in Illinois. And co-founders Michael Liyeos and Rob Walters are thrilled to have reached a point where they can let family and friends in on the action.

For over 15 years, the company has helped retailers, restaurants, and medical practices open locations across the United States. To date, Quattro Development has well over 65 clients in its portfolio, including Chipotle, Starbucks, Mission BBQ, and Guidepost Montessori.

Quattro Development’s co-founders, Rob Walters, and Michael Liyeos, grew the company from a two-person show to a thriving business with 10 employees. To develop the company and finance projects, Quattro’s co-founders largely relied on private investors to supply large amounts of money.

However, Quattro Development is now embracing a new approach to raising capital. In May 2023, Quattro Development issued a press release announcing a friends and family investment fund called the Quattro Growth Fund LLC. Through this new fund, friends and family now have the opportunity to invest in Quattro’s real estate projects without the barrier of accreditation rules or high capital expenditures.

“We’ve gotten so much support in our lives personally and professionally from our friends and family. It’s cool for us to set up the fund so that we can share the fruits of our labor with these people,” Rob Walters said. “It was really rewarding to receive that much interest in the fund from our investors.”

Rob Walters and Michael Liyeos recount how they raised funds for Quattro’s past projects and explain how the new fund will set the company up for even more expansion.

The Key to Quattro Development Funding? Persistence

Quattro Development is no stranger to the challenges of real estate financing. Walters and Liyeos founded the company 15 years ago during the throes of the Great Recession. “I think we thought that getting our first three projects financed was goigt to be a very easy box to check,” Walters says. “We just didn’t know what we didn’t know.”

In the early days of their company, Walters and Liyeos felt confident about Quattro Development’s trajectory thanks to their equity partners. “When we started our company, we had an equity partner that was going to be our money. Mike and I did not have any money from our families, and we hadn’t raised any. Having that first equity partner allowed us to get Quattro going even though the economy at that time was in a recession. But just when we got things going, our partner ended up going bankrupt. We had this business planned out and got it rolling, and then we didn’t have any money,” Walters explains.

Instead of giving up, the duo persevered. “We went and just talked to anybody we could about getting equity for ground-up real estate projects, but it was the middle of the great financial crisis. Finally, a broker we met at a real estate luncheon gave us five names, and we met with four of them, and none of the four were interested. The fifth one ended up becoming interested and did 40 projects with us on the equity side,” Michael Liyeos says.

Thanks to that fighting spirit, Rob Walters and Michael Liyeos secured the funding that saw Quattro Development go from a small business to a development firm with a nationwide footprint.

Quattro Development’s New Approach to Capital

In the United States, 2023 has been a challenging year for raising capital for these projects. According to a report by McKinsey & Company, closed-end fundraising decreased by 23% from 2022 to 2023. Banks aren’t freely providing financing for these types of deals, either, which means real estate developers need to work hard to source capital for their projects.

Quattro Development frequently seeks investment capital to fund its projects. “For the majority of our projects, we do have equity investor partners,” Michael Liyeos says. “However, our typical deal includes a select few investors who invest hundreds of thousands or even millions of dollars that allow us to leverage our capital stack with debt financing.”

Friends and family typically don’t have that kind of money on hand, which prevents them from participating in Quattro Development’s projects. But with the Quattro Growth Fund, friends and family can pool their resources together to raise funds without the high capital threshold. “The idea behind the fund was to create a larger pool of equity investors who are putting in, on average, somewhere between $25,000 to $100,000,” says Liyeos.

This new approach to funding also flips the script on Quattro Development’s projects. Instead of finding opportunities and bringing in investors when the deal is ready, Quattro Development can raise capital before deploying it. This way, financing is readily available when an opportunity arises, making the company more agile and competitive.

A Bright Future for the Quattro Growth Fund

Returns are never a guarantee, but Quattro Development has made a name for itself by developing projects that can outperform traditional asset classes, like stocks and bonds. “Our goal is for the fund to generate returns on par with what we’ve achieved over the course of our development careers. If the fund performs like we think it will, this might be the first of many funds that we create. This is a big step for Quattro as a company,” Rob Walters explained.

In many cases, private equity deals can outperform traditional asset classes. According to the Cambridge Associates U.S. Private Equity Index, private equity deals returned an average annual return of 14.65%, while the S&P 500 returned 5.91% during that same period.

It’s too soon to tell what the future holds for the Quattro Growth Fund, but it’s already off to a great start. The initial goal was to raise $5 million to $10 million in the fund. Quattro Development easily surpassed that milestone, raising over $13 million. Its first investment will be in a property in Arizona, which Quattro Development will retrofit for Guidepost Montessori School.


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