Scaling Smart Real Estate Development With Avner Krohn (Podcast) – Real Estate

Avner Krohn is the Founder, Chairman, and CEO of Jasko
Development, a vertically integrated real estate development firm
based in New Britain, Connecticut. Under his leadership, Jasko has
delivered a wide range of projects across the multifamily,
healthcare, and retail sectors—focused primarily on
underserved urban cores in the Northeast.

Avner launched his entrepreneurial career at age 10 and has
since spent more than two decades working across real estate
development, historic preservation, and adaptive reuse. With deep
expertise in finance, public-private partnerships, and ground-up
construction, Avner has led the development of over 400 residential
units and commercial properties, with another 500+ units currently
in pre-development.

He is widely respected for his ability to navigate the complex
intersection of development, government, and community needs. Avner
is also an advocate for mission-aligned growth, integrating
long-term public benefit with investor returns. 

Insights from Avner Krohn on Public-Private Partnerships in
Real Estate Development

With a background that bridges entrepreneurial grit and
large-scale execution, Avner Krohn brings a rare blend of strategic
insight and real-world experience to the commercial real estate
space. His vertically integrated firm, Jasko Development, has
carved out a niche working with municipalities to unlock
challenging projects that others overlook.

In this episode of The Dealmakers’ Edge,
Aaron Strauss speaks with Avner about the real dynamics of
public-private partnerships, from how to build trust with city
officials to structuring deals that actually pencil in tough
markets. Avner also shares how he’s scaled a lean but
powerful team, why mindset matters more than market timing, and
what keeps him grounded through the ups and downs of
development.

2:13 – Avner’s early days: entrepreneurship at age
10 and launching his first business

5:45 – Lessons from Israel, building a foundation in real
estate and finance outside the traditional path

8:58 – First deal in Brooklyn and the road to larger-scale
development

13:35 – Structuring turnkey solutions for the healthcare
and retail sectors

16:12 – The anatomy of public-private partnerships and why
most developers miss the mark

20:43 – What municipalities actually need (and how to earn
their trust)

24:01 – Managing a growing business while staying present
with a young family

26:47 – How Avner balances optimism with realism in
turbulent markets

Transcript

Aaron Strauss: You’re listening to The
Dealmakers’ Edge with A.Y. Strauss diving deep into stories
behind commercial real estate leaders.

Hello, everyone, and welcome to The Dealmaker’s Edge. Today,
we are really excited to be joined by Avner Krohn, who’s the
founder, chairman, and CEO of Jasko Development.

Based in New Britain, Connecticut, Jasko Development is a real
estate firm focused on multi-family retail and healthcare projects.
They work closely with communities to deliver housing and
commercial spaces that align with local needs. With a vertically
integrated approach and an emphasis on technology, Jasko manages
development, construction, and asset management to create lasting,
functional spaces.

Avner has led the successful delivery of dozens of commercial
real estate projects across the Northeast, expanding retail,
healthcare, mixed-use, and family. With a strong focus on
community-first development, he works closely with cities and
stakeholders to ensure every project is a win-win.

Avner is a good friend of mine. I’ve spent a lot of time
with him over the years. He has high integrity, a wonderful
personality, and super positive energy. In this conversation,
he’s going to talk about successful dynamics in public-private
partnerships, which you don’t hear people speak about too much,
riding the highs and lows of development in the current markets
we’re facing, and also just how to navigate and juggle so many
projects in real time with varying degrees of responsibility. Hope
you enjoy the episode.

Hello, everyone. Welcome to The Dealmaker’s Edge. Today, we
are pumped to be joined by Avner Krohn. He is a dear friend of
mine, somebody I really respect tremendously. He brings an
incredible energy to the table, and we’re going to get his
story and learn from it today. So, Avner, I’m really excited to
have you here. Thanks for being here today.

Avner Krohn: Hey, Aaron, my pleasure. When
I got the invite, I was super excited. You and I have a great story
about how we met—we can touch upon that a little bit
later—but I’m really excited for the conversation today
and happy to be here on this rainy Monday.

Aaron Strauss: Yes, cold rainy Monday, but
good energy, good vibes, and I’m super pumped to take the
time to hang out here a little bit.

What’s always good to do is to sort of frame the
conversation. Maybe you could talk about where you grew up. I know
you started really young in the business, but kind of where you
grew up, your upbringing, and maybe your first foray into business,
and how you first got started, that would be wonderful.

Avner Krohn: Yeah, absolutely. I grew up
in Monsey, New York, a little enclave of an ultra-Orthodox
community, with great, fantastic parents who were super supportive.
We’re four brothers. I always joke around—my
dad’s a mohel, he does ritual circumcision, so he
didn’t know anything about daughters.

So, we’re four rambunctious boys. My brothers and I all
played, I’d say two of my brothers and I played music
professionally growing up. It was a really wholesome upbringing and
a very close family.

Growing up, I just didn’t like boredom. I didn’t
particularly like some of my studies working in elementary school.
So, when I was 10 years old, I said to my dad, “Hey, can I
borrow your lawnmower?” And that’s where my
entrepreneurship essentially started, outside of selling my
grandfather’s presents to other friends and family.

I started cutting people’s grass and made, I think, $600
or $700 when I was 10 years old, then I reinvested that into
additional equipment. My parents gave me a loan, and by the time I
was 15, we had a hundred accounts.

I wasn’t dressed in a suit and tie but rather covered in
grass from head to toe. I’d come back from school, blowing
leaves late at night with big halogen lights lighting up the yard.
My dad would come out and help us fix equipment. My mom is this
4’11”, shy Jewish woman, an amazing mom, driving around a
bunch of teenagers with trailers filled with equipment.

We had massive barrel garbage cans on top of the car. When I
think about it today, it was wild. But I really learned what it
meant to work hard, to be honest, and to manage a team of
people.

Aaron Strauss: Amazing. I guess that was a
really good foundation for construction. A lot of people you meet,
they buy and sell real estate, they finance, they JV, they lease,
but you don’t meet very many really up-from-the-ground
development, you’ve really rolled up their sleeves. And I
think from a young age, you’ve shown that—you like to
roll up your sleeves, literally and figuratively.

Let’s talk about maybe your first project or two—your
education and then how you got started on the first deal.

Avner Krohn: Just putting it all out
there. I was in high school through 11th grade. It wasn’t
going that great, wasn’t doing super well on the studying. I
just wasn’t stimulated back then, and I wasn’t learning
what I really wanted to learn. I wasn’t learning anything about
finance. I wasn’t really learning about current events of the
world.

But I was working. And I was working hard. I mean, I’d get
myself thrown out of school so that I could catch up on my
landscaping. Together with my employees, they had their parents who
weren’t all that happy. So it was quite interesting times, as
you can imagine.

But I was always working—working nighttimes, weekends, and
summers. I had decided, after 11th grade, to go off to Israel. I
had a lot of family and friends there. Like I mentioned earlier, my
brothers and I were playing music professionally, and I figured,
“You know what? I’ll go for a couple of months. I kind of
missed my 12th grade, my senior year, but we were going to look for
a new experience.”

My mom was running the landscaping business at the time. I ended
up going to Israel, came back in the summer, took my GEDs, and made
sure to get my high school diploma. I fell in love and said,
“Hey, I’ve got my whole life to work, and I’ve
practically worked my whole life. So I’m going to stay in
Israel for a period of time.”

I went, learned in a Yeshiva, Talmudic studies, and was playing
music around the country professionally. What would happen is,
I’d come back to the States twice a year, and at times, my
mom would hire college professors. I’d start learning
finance. They were on break, on vacation from teaching, and I was
back from Israel. So I got my real estate degree, learned
finance.

I’m dating myself to some extent—I’m not that
old—but I mean, there was no Google. I didn’t have a
real estate translation. So I sat with this little dictionary, and
I remember the first time I heard the word
“amortization,” I’m like, “How do you spell
that? I have no idea what I’m talking about.”

But the understanding for me was trying to get into the
investment, creativity, and creation of real estate. It was a
driver of mine since I was young, and I kind of was exposed to it
when I was a little bit younger. I invested $10,000 through a
friend of my mom. They had a large multifamily platform at the
time. I didn’t really understand what they were doing, but I
made 10% on the money, and I said, “Hey, I come from a
family—grandparents, uncles—all in the law field,
attorneys at big firms. That’s not for me. I got to sit in one
place for too long.” Little did I know that I’d spend
the majority of my day with my lovely attorney friends.

So I go to Israel. I end up staying for four years in total. I
come back, I’m 21 years old. My uncle, at the time, was an
associate at Simpson Thacher. He and I partnered, and we bought our
first house in Brooklyn.

At the time, it was Marine Park on 35th Street. Growing up in
Rockland County, we grew up with a yard and large space. I
couldn’t understand—I’m like, “Hey, this is
a little box. There’s no yard. Three bedrooms. Who’s
going to live here?”

But we kept the property for 16 months, and we doubled our
equity investment at the time. That gave me a taste. I remember
attending my first closing, where the residential attorney at the
time was representing both the lender and myself. It was a very
interesting learning experience.

From there, I had opportunities to renovate some other homes for
individuals or friends of our family on a fee basis. I really loved
the creativity of doing something like that.

Aaron, as you mentioned, it wasn’t just about the numbers.
It was also about constructing or building something that I thought
could add value. From there, I started buying property in New
Jersey—smaller multi-families. Then I landed in a historic
district, having no idea what that even meant.

Again, I’m in my young 20s at the time. It really taught me
about tax credits, historic tax credits, restorations, and so on
and so forth. We went from there to boutique office buildings,
I’d say between 20,000 and 40,000 square feet. In 2006, I had
purchased my first office building in Connecticut. That was a
property where I said, “Hey, look at the underwriting—at
50% occupancy at $12 a square foot gross, I’m paying all my
bills.” I just sold that building a few weeks ago, almost 16
years later.

A lot of people asked me, “How did that make any economic
sense?” It was a historic tax credit project that we converted
at a later point in 2019. I’m all about opportunity, and
opportunities rolled in on the build-to-suit side, where a lot of
medical dentists and doctors would come, try to lease space from
us, and then have to go through the architectural, engineering, and
design permitting process. It’s not what they do, they’re
busy practicing medicine.

So, I kind of fell into the build-to-suit platform, where they
signed a long-term lease, hence building a lot of value prior. We
performed all the construction and handed over a turnkey space. But
it was not from the perspective of a large-scale Starbucks
corporate model, we used the same model, though, for the
mom-and-pop medical industry, which led us to do T-Mobile, gas
stations, Hartford healthcare surgery centers, and AFC urgent care
centers, which were 23 different states. We had focused on the New
England market per se.

Over time, we also worked on multiple smaller 20,000 to
40,000-square-foot historic conversions. That gave me a taste of
the public-private partnership, where these deals did not pencil
out, yet they offered tremendous upside for the communities they
were in, many times in more distressed municipalities with
beautifully historic buildings that had been sitting underutilized
for many, many years. I got the taste of the public-private
partnership from there, and over the past five years, really rolled
into larger-scale multifamily, which unleashes my creativity,
brings a couple of white hairs, and so on and so forth.

We’ve built over the past couple of years about 400-plus
units and a mixed-use component in multiple different projects,
typically focusing on 100 units plus, and we’re going in the
ground, God willing, this year on 542 units, predominantly in the
New England, Connecticut marketplace.

Aaron Strauss: You’ve also built a
great team, many of whom I’ve had the pleasure of meeting and
hanging out with at some dinners, et cetera. You really are
vertically integrated. A lot of developers are outsourcing, but you
really have a full team that’s doing everything A to Z.

Maybe you could talk about how you scale your operational
capability alongside projects because at certain times—and we
feel it too—we’re a business, maybe overstaffed,
understaffed, finding the right people for the right project, the
right opportunity. You’re always growing. So how do you manage
to juggle between managing at a high level almost politically?

You’re interfacing with a lot of political figures,
public-private partnerships. You’re keeping relations with your
investors. You’ve got to have a lot of broker relationships. I
know you’re on the phone with lawyers a lot, maybe more than
you’d like, in a good way, making deals. You’re also
running a team. How do you maintain that juggling? I know you work
extremely hard, but how do you set yourself up daily to succeed
while you have all these different balls in the air?

Avner Krohn: Great question. I’ll add
to that—a four-year-old, a two-year-old, and a
one-year-old.

Aaron Strauss: Oh, yeah. We didn’t
even get there. I didn’t even go in there exactly, yeah.

Avner Krohn: Talking about balance,
though, and being present as a dad, but we’ll talk about that
in a moment. It’s a great question. What I don’t want to
do is only focus on the positivity. I also want to focus on the
challenges because I feel that many times, people get up, we tend
to eat breakfast, happy hours, and everyone’s spouting how
fantastic and amazing it is. It’s just, “Look, we’ve
grown, and it’s just easy.” From the outside, it looks
like this tremendous success. It’s challenging.

I think the big focus is good people. You cannot grow without
delegating. So I’ll talk about my organization and a couple of
key individuals and how I’ve managed to grow and my focus on
growth. Also, on myself and my family, because that’s a big
component that ties together. You can just work and work and work,
but at some point, what’s it all for? Another part of this
conversation, hopefully.

Our chief operating officer, Uriel Schatz, I’ve known him
since my Israel days. When he didn’t speak a word of English,
he had come in from Mexico, and we met in the old city of
Jerusalem. He used to nod like he understood what I was talking
about. Little did I know that he wasn’t fluent in English at
the time. He ends up going to Yeshiva University. He ends up
graduating with a finance degree, and just fast forward, worked for
very, very large multi-billion-dollar family offices.

He’s our chief operating officer. He’s a guy I could
trust with my life. So he can run a part of my organization. I
don’t have to be on every email, on every conversation, on
every follow-up, finance, and so on and so forth.

It’s also hiring individuals and part of the team that may
be way better at specific aspects than I am. You have to humble
yourself and say, “Look, I’m good at X, but there are a
lot of other people that are good at Y.” Our head of
construction has been with me for 19 years now, I’d say. I grew
up with him since pre-18. He and I worked in landscaping
together.

He’s a licensed chief building inspector. Another individual
works on property management for us and special projects—been
with me for eight years. I can call him day or night. If
there’s an issue, he’s going to make sure it happens. It
keeps on going. We’re a team of about 25 people, and getting it
right sometimes is difficult.

We may have some hires a couple of times that don’t fit the
team. One of the difficulties is knowing when to let someone go. If
they don’t fit the culture or the work ethic, or you can’t
trust that individual, then they’re not the right person for
our team. That’s really helped on the growth.

The challenge, Aaron, like you mentioned, is, “Hey,
you’re growing, there’s payroll, there’s
infrastructure, and yet always on the development side, you need to
make sure that you have a pipeline.” The pipeline starts years
before there’s a shovel in the ground.

Now, in this particular environment, it’s even more
difficult because you may have thought you were going to finance
from one specific direction. Well, the lenders were close to
lending at a period of time. There was COVID. There’s
hyperinflation. Navigating that—there’s no map.
There’s no particular way to say, “Hey, here’s how
you’re going to navigate this.”

Entrepreneurial spirit is huge. Like I mentioned before, having
great people you can trust and delegate to is essential. Praying to
God. That’s all I can say. It’s like, “Hey, praying
every day and then hoping for the best.”

I heard something really interesting the other day. It was about
individuals going through difficult times at a point in time on a
large-scale development side of things. When you look at the
mountain, you say, “Wow, how am I going to get past this?
It’s insurmountable.” But if you do something positive
every day, the compounding effect of that is tremendous. I took
that lesson internally.

Part of scaling and growing the business is, “Hey, all of a
sudden, you need HR.” Ten years ago, HR—for what? It was
just me and three or four other people. That was it. They were good
buddies, and we were working together. Growing in areas that I
never imagined were also challenges, but I do love to learn.

If you combine an entrepreneurial spirit, creativity, and a
thirst for learning, it goes back to my conversation prior about
leaving high school after 11th grade where I always wanted to
learn, but the mold didn’t work for me at that particular time.
At no point do I tell anybody to do what I did, it takes a very
particular individual.

But scaling and growth in challenging times will also make you
stronger when times are super fruitful and things get a little
easier. The lending markets open up. Construction costs come down
to some extent. So those would be the key takeaways.

Aaron Strauss: You’re also one of the
most positive people on planet Earth. I’ve been around a lot of
people, and your energy is through the roof. So no matter
what’s going on, it could be raining fire and lightning, and
hail, and you’ll just find a way to have a positive outlook. I
think that’s also a huge driver of how you’ve attracted a
lot of like-minded people to your orbit.

Speaking of attracting, maybe we could talk a little bit about
the public-private partnerships. It’s kind of a niche space.
You hear a lot of people talk about it, but not many people do it
exceptionally well. You’ve been doing it a long time. I know
the relationships you have in certain municipalities in Connecticut
go back at this point, many, many years. Through the fruitful
relationships there, you can make deals pencil.

Perhaps today somebody’s trying to do certain development
deals, and they’re trying to think about getting deal flow, and
they’ve never really explored this path. Maybe you could talk
on a macro level about how you’ve seen success with the
public-private partnerships.

Avner Krohn: Well, absolutely. My grandma
always used to tell me, she’s like, “When you negotiate,
make sure to leave something on the table.” It’s the
opposite takeaway for some other individuals. Don’t wipe the
table clean.

I’ve taken that model with me where you don’t have to
milk every last dollar, squeeze every last penny where one side has
to walk away feeling bad or taken advantage of. That’s really
the segue into the public-private partnership. It’s a
partnership. People don’t understand what that means.

Essentially, there’s a municipality that is going to benefit
from your development. Now, not every municipality can foresee the
benefit, and not every city council member or every mayor’s
office or every state will see the benefit. Then there’s a
benefit for us as a developer where essentially the municipality
and/or the state are going to contribute towards your project.

So the challenge is making sure that it’s a win-win and
being able to portray to a municipality why they want you,
specifically you, not just a development. An RFP goes out, and
people could say, “We’re going to build X amount of units
or retail.” But why do they want Jasko Development or Avner
Krohn to be a part of their municipality?

And so what I try to do is think about it from their perspective
and say, “What are we looking for?” We’re
typically, in a public-private partnership, looking for them to
contribute. What can a town contribute? What can the state
contribute? Well, they could contribute a long-term pilot
program.

Connecticut doesn’t really have pilot programs, so we call
it a tax fix. Now, I made it up one day. I’m like, “I got
to look at the state statutes. If it’s allowed, something that
a local municipality could contribute is long-term tax deals.”
You have to be able to show the municipality, “Hey, you’re
going to make two, three, maybe 500% more tax revenue with this tax
deal, in addition to having very significant development in your
core town.”

So it’s a win—not, “Oh, hey, you’re going to
give this developer a whole ton of millions of dollars of tax
breaks. They’re just the rich developer who’s going to
benefit.” So that’s the conversation we have on a regular
basis.

Developer equals rich equals being taken advantage of the city.
So the conversation is granular, and it’s very long-term
relationships. It’s not like you can storm your way into a
municipality one day and say, “Hey guys, we’re here. You
want us to work here? This is what you’re going to have to give
us.” It’s reputation.

Then it’s technical know-how because there are a lot of
regulations placed on local municipalities—federal government
related to state funding, state funding related to grants, and the
hair that may come along with public-private participation.

So, for example, a lot of people don’t realize that a tax
deal may not be transferable. Well, how does your lender look at
it? Because if they ever took a property back, they’ve just
lost the tax deal. It’s a no-go.

So there are many different factors. We just turned down a $4
million grant awarded by the state of Connecticut because,
unbeknownst to the state agency, the Department of Labor through
the state put a ruling out that the entirety of the project could
have to go prevailing wage—not just the $4 million grant.

That particular project was about a $27 million project. The
cost, together with the affordability component, was about six and
a half million. So if you take a $4 million grant, you just have a
six and a half million dollar cost. But essentially, it’s
weighing into the public as well.

“Hey, we desperately need housing of all kinds. We need
affordable, we need workforce, we need market rate to free up some
of the affordable units for other individuals. How do we accomplish
that?” And so I try to be a part of that conversation as much
as possible and think out of the box.

In today’s environment, if you give me a free piece of land
in most towns in Connecticut—excluding super affluent
towns—I cannot build a yield to cost that will actually make
any sense for ourselves, our investors, or our lenders. So the only
way to actually succeed in most municipalities today—look at
some of the projects customers have been putting on in New
Jersey—is the public participation.

Again, when you’re taking someone home, you sit on the city
council, they may be a doctor, maybe they’re working in a
completely different field, how do you explain debt service
coverage ratios? How do you explain expectations for returns? How
do you explain the benefit? And it gets very granular.

Part of that is really reputation. It goes into our design
process. When we’re building in a moderate-to-low-income town,
we’re building nicer than in an affluent town at times.
That’s because we want to attract people to live here. The
local municipality is participating, so we want to give something
back.

We may be able to get away with a three-story building, but
instead, we’re going to build something six-story. It’s
going to add density and foot traffic to the core downtown. So
it’s pulling yourself as the developer out of the equation and
thinking about it from the municipality side, and then being able
to insert yourself back in and say, “Okay. Here’s how this
all works.” And it’s many, many years of participation on
the political side as well.

Aaron Strauss: Well said, Avner.
You’re really encapsulating that beautifully. Long and short of
it is having that integrity too. When you come to a town, a lot of
times there’s this fear of “Who is this developer? What
are their morals? How do they deal with people?”

Not just the granular X’s and O’s, but will they be a
tried-and-true partner that we can trust? Can we sleep at night
knowing we’ve given this person reign, frankly, to develop
where we live, where we work, where we play, where we raise our
kids? And you’ve really built that reputation over the years,
which is fabulous.

So one more question I have for you while we’re talking on
this is that we call this podcast The Dealmakers’ Edge, and
there’s a lot of mental aspects to the business. You’ve
described how you’re juggling projects, you’re juggling a
growing young family, juggling a lot of team members, a lot of
political relationships. You have good days, you have bad days, you
have in-between days. You’re an extremely positive
person—one of the most positive people I know, by the
way.

How do you talk to yourself when you’re having those rocky
times? You know, a lender pulls a deal, an investor backs out,
interest rates double what was forecasted. How do you sort of talk
to yourself to power through some of those challenging times?

Avner Krohn: It’s a great question.
It’s a deep question. I take a deep breath. I got a great wife,
thank God, that I can talk through some of these challenges. I feel
like it’s been a storm over the past couple of years because,
Aaron, like you mentioned, in any of our businesses—I mean, a
pandemic, a 40% increase in construction costs, a doubling of
interest rates. So you think you got through one thing, and then,
what’s coming next?

But I am internally optimistic, and I am a problem solver. I
think if you own a business and if you’re a developer, it’s
all about problem-solving. So it smacks me in the face. It hurts. I
don’t have an answer. How are we going to get through this
challenge at this particular time?

But I don’t give up. So I also look at our investors’
funds as more important than mine, which is a huge factor because
you need to make sure that, “Hey, when there’s a
challenge, you want to protect all people’s livelihoods that
are invested with us as well.”

So I try to exercise, which helps a lot, by the way. If I have a
bad day, I’ll just hit the gym a little bit harder that day.
But it’s really looking at it and saying, “Okay,
here’s the reality. Here’s the challenge. But to every
challenge, there’s some sort of workaround.”

It may not be how we thought. It may be a completely different
aspect. We may not make as much as we want to make. There are going
to be uncomfortable conversations with a lender or uncomfortable
conversations with a third-party contractor and so on and so forth.
But it’s about trying to figure out the macro. Like I said a
little bit earlier, it’s looking at how I accomplish something
positive every day towards solving the issue.

For example, when there was hyperinflation, did we see the
writing on the wall immediately in Connecticut that there’d
be this hyper rental increase? We didn’t know that right
away. Then, all of a sudden, a state that had stagnant
rents—maybe a growth of two or three percent for
decades—had a massive increase in rental income. So while it
didn’t solve all issues, it solved for construction
overruns.

Now, back in early 2020, we didn’t know about that early
on. So it’s about navigating the conversations that have to
happen prior. For myself, there are down days, difficult days,
difficult moments, difficult weeks—because there’s not
always an answer as to how we’re going to get past any
particular challenge.

But I like to underscore that it’s a challenge. The goal
is to think past it and get super creative. One of the things I
remind myself all the time is that with challenging times, there
will be an uptick in the marketplace.

If you look back and you say, “Hey, 17 years ago, did you
think you’re going to have interest rates at 2% and cap rates
in tertiary markets at 4%,” people would have thought
you’re nuts. But that happened at a period of time.

So it’s riding the waves that gets me past it. Again,
it’s also leaning on my team because what really is
challenging, but really is the view of your organization is getting
through the challenging times and being able to lean on mates and
our staff, and it’s not just all on my shoulders.

When you know that you have other people that are going to work
tirelessly to overcome obstacles, that goes a long way. Then Aaron,
you know this about me, I always want to have a good time. I have
to have a good time. My friends, my team has to have a fantastic
time. If there’s a bad day that I want to make that night an
even better night. Because you know, there’s one life.

So that’s the other part of it. Let’s have a great
cocktail. Let’s go out and have a bunch of friends out.
Let’s have dinner. Whatever it’s going to be. We’re
also blessed. I keep Shabbat. So for me, Friday night, I’m out,
man. I’m checked out till an hour after sundown on Saturday
night. That’s time to rejuvenate as well with the family and
just to rethink life and say, “Okay, it’s going to be
okay.”

The other major aspect, I don’t want to forget to leave this
out because it’s the most important aspect. I believe in God.
And as much as I like to think that I’m in control, we all like
to think, “Hey, yeah, I’m going to do this mega project
and I’m going to work through this challenge,” I’m a
pawn. I do my best to take a step forward. But ultimately, I’m
a big believer that God runs the world, which helps set me up to
not worry as much and I’m telling that to myself over and over
as we speak right now.

Aaron Strauss: Well said. And I do agree.
You always want to have a good time. And people want to be around
people who are positive. There are a lot of people who just have
this sort of down-and-out mentality. They’re hot when the
market’s hot and down when the market’s down. But I’ve
never spent time with you where you have not had a smile on your
face and a positive energy and a good laugh. We’ve had great
times together as well. Always fun to hang out.

One more question I have for you. Feel free to throw in anything
else that I have not asked you. You’ve seen so many changes in
the market last six, 12, 18, 24 months as described. No one has a
crystal ball, but in real time, you’re buying materials for
construction. You’re talking to municipalities. You’re
collecting rent.

You have a lot of fingers on the pulse that maybe other people
who are not developing may have. And maybe you could describe where
you’re feeling the market is today versus even just six, 12
months ago.

There are a lot of moving pieces now. And maybe you can talk
about whether you’re more optimistic, less optimistic, what
kind of trends you may be feeling projecting out a bunch of
months.

Avner Krohn: I’m going to look at a
little bit more hyper-focused on New England, Connecticut, and then
how I view that particular market because there are many other
high-growth markets that while I read what everybody else is
reading, I don’t have my finger on the pulse in those
particular markets.

Those markets had like super high growth over the past number of
years, tremendous amount of construction, the absorption
rate’s different. I’m in a state where there’s a high
barrier to entry for construction. Most of the projects are between
100 and 200 units. You’re not really dealing with mega projects
and high-rise outside of certain specific cities.

So yes, there have been many, many, many challenges. I think the
interest rate coming down conversation clearly has been one out of
a couple of years out for like, “Hey, you know, 2024 is going
to be so much better and 2025 is going to get great. There’s
election and everything’s going to be all rosy.” Then we
have the tower of conversations and the 10-year or the
five-year’s going up and down every single day.

I think that, particularly in New England, we are seeing
construction costs stabilize. We are seeing subcontractors who are
now not as busy for some particular trades. We’re also seeing
an influx of some trades from out of state. So for example, New
York City or even in some of the high-growth marketplaces where
construction has slowed down. So there are tradesmen who are either
relocating or coming into work within the New England region.
That’s a benefit.

We have seen some of the local lenders open up additional
lending for projects to experienced developers in particular
markets. I’ll give a case scenario, which got approved last
week on a small loan. It’s a $10-plus million loan on a second
phase of a very successful project. We’re borrowing at 80%
loan-to-cost at a 7% interest rate fixed for five years. Super
local lender, they’ve seen our success. So they’re open to
getting aggressive, so long as your debt service coverage ratio
meets the requirements. And it’s below 1.25, by the way.

So I think that moving to the future, there are a lot of
projects that are falling off the grid that don’t make some
financial sense. I do believe that a lot of municipalities in New
England are more open to a public-private partnership. We just
passed legislation in the last legislative period in the state of
Connecticut, which now allows every municipality to enter into up
to a 30-year tax deal, where prior it was capped at 10 years for
many municipalities.

So I think that we will hopefully see some—this is an
unknown to me, I’m not an economist, and I wish I had a better
outlook—but I don’t think that the interest rate is
plummeting. If it does, we end up with another set of concerns,
which is unemployment potentially in particular markets. I’ll
give you an example, ESPN has been hiring in Bristol, Connecticut,
random town, no one would ever imagine, but we’re seeing dozens
of tenants signing leases in our particular markets. If they have
layoffs, it’s a direct hit to the local economy.

So it’s like, you better pray for what you wish for from
some perspective. Rates come down, does help to some extent, but
where is that economy? Another big question. There’s some
balance with all of the perfect balance, I don’t know where
that is.

Construction costs are where they are. You’re not going to
see a deflation. You may see some kind of balance, but I don’t
think your HVAC unit that used to cost $11,000 a unit in 2019, that
went up to $22,000 a unit, it’s not coming down to the $14,000
unit. Your balance might be $17,000 or $18,000 a unit. And so rent
is going to have to stay at the levels they are right now and
increase.

There is a lot less housing availability on the single-family
home market in the New England market. There’s not a lot of
land. So I believe the delta between rental and purchasing a home
is larger than it’s ever been with the current interest
rates.

Homebuilders have difficulty building something ground-up when
you’re not building a large-scale project, which is very, very
difficult in the state of Connecticut. And so I do think the rental
market in New England’s going to stay very strong. I think that
rents are going to increase as they have significantly.

I think that the lending market locally, if you are hyper-local
and involved, is going to open up even more so than it has right
now. That’s my prediction moving forward in the next six
months.

Aaron Strauss: Beautiful. Well, we’ll
play the tape in six months and see what happened. But all kidding
aside, no matter what happens, I’m confident you’ll be
ready to face the challenge. You’ll be in a good mood that day,
no matter what’s going on.

You’ll be a great dad, great husband, great friend, all the
other good things that are so critical. But Avner, I guess from
here, we’ll wrap. I just want to really thank you for taking
the time. It’s always a pleasure, whether it’s over this
Zoom recording or in person.

Keep doing everything you’re doing at a very high level.
It’s so much fun to watch. I’m just excited to continue to
see your continued growth as a professional and as a human
being.

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