GlobeSt.com: So what's the mission of ELF?

Stanfill: We're targeting what I refer to as the middle market. We're interested in bringing liquidity to non-controlling partners in middle-market properties, properties with a full value from $5 million to $50 million. Our investments typically would be in the $2-million-to-$10-million range.

GlobeSt.com: So it's essentially a buyout plan for non-controlling partners.

Stanfill: I'd term it an alternative exit strategy. Typically a non-controlling partner has no real say in major financial events such as a sale. If that partner needs liquidity, he's usually out of luck, unless he goes to other asset classes where he's got better options. We're trying to provide a new source of liquidity to a segment of the market that heretofore has not had any.

GlobeSt.com: I've seen published reports that call your niche a trend. You say no. Why?

Stanfill: To the best of our knowledge, we're the only firm whose primary focus is individual properties. Others are focused more on acquiring portfolios or entire funds.

GlobeSt.com: It seems a difference without a distinction.

Stanfill: I want to stay clear of the people who are already in the market, primarily in the upper-end institutional sector. My background is in the brokerage side of the industry. So I'm much more attuned to individual investors and developers.

GlobeSt.com: As the market continues to recover, and as interest rates start to climb, what will happen to your model?

Stanfill: When we decided to get into this business, there were three things that drove us. One was to bring liquidity to non-controlling partners. Another was the very large growth of the TIC investment format. Some of those investors may decide that while it was convenient to go into a TIC investment, they really don't control their own destiny as to when to get out of the thing. If the capital gains tax rate goes up—and remember that John Kerry has suggested he would increase the capital gains rate--some of those people may liquidate their TIC interest and decide to pay their gains taxes at 15% rather than be forced to pay them at a less advantageous time.

GlobeSt.com: So a change in administration will benefit ELF?

Stanfill: Very much so. The third leg of the stool is that we've seen so many properties financed at favorable low interest rates and on short-term amounts. When these loans come due and the rates have risen, those borrowers aren't going to be able to refinance at the same dollars, and there will be the need for additional equity capital. We intend to be that equity source because we're willing to come in at a non-controlling position rather than forcing ownership to sell the property. Let's say you have a $20-million project and only $15 million of debt on it today. When that debt comes due you can borrow only $12 million. We can come in with a $3-million piece of the partnership on specific terms.

GlobeSt.com: As a non-controlling partner, what's your upside?

Stanfill: When we make the investment, we'll ascertain ownership's expectation for the remaining life of that asset and we'll price based on that. If the hold is another five years, we'll give ourselves some leeway and say five to seven. We'll price our participation accordingly. Also, we're buying at a discount to value. We don't want to be just another checkbook in the market. We believe we can buy an interest in those same assets at a discount to what they're trading for. If we're successful and prove the concept, down the road we can aggregate them into a pool, mark them up and sell them to smaller investors as part of a fund.

GlobeSt.com: Is there a timeframe for pushing out beyond the West Coast?

Stanfill: I hope that if we reach our goals for this year, we'll probably start looking at much larger transactions, and we'll certainly look at anything in the Midwest and the East—if the transaction is large enough.