Newbrook frames its strategy as providing a customized 'Gulfstream' experience for taxable investors, while large alternative firms sell a mass-market '777' product optimized for tax-exempt institutions. This highlights how smaller firms can thrive by creating a superior, tailored solution for a valuable niche market.
Newbrook refuses to invest unless the cap rate exceeds the borrowing cost from day one. This serves as a critical self-discipline, preventing speculation on future appreciation and guaranteeing that the asset generates a positive cash-on-cash return immediately, thereby de-risking the investment from the start.
Counterintuitively, the best multifamily markets aren't high-population-growth cities like Austin. These attract too much new supply, capping rent growth. The optimal strategy is to find markets with barriers to entry and minimal new construction, as this creates a durable runway for rental increases.
Most real estate funds use floating-rate debt to facilitate quick flips for carried interest, a suboptimal strategy for taxable investors. Using long-term, fixed-rate financing enables longer hold periods, which is essential to fully benefit from the tax deferral provided by an asset's depreciation shield.
Newbrook's hedge fund arm provides a unique synergy. By analyzing the largest public company employer in a target real estate market (Norfolk, VA), they discovered a pending 12% wage increase. This public market insight, unknown to local real estate players, gave them higher conviction in their private investment's future rent growth.
The business began not with a market opportunity, but a personal one. Founder Robert Boucai realized his best after-tax returns came from real estate, but no existing general partners offered the tax-efficient, long-hold, high-alignment structure he wanted for his own capital. He built the firm to be the optimal solution for himself first.