Ruttenberg Gordon Investments is Thinking Three Deals Ahead

Investment partners David Ruttenberg and Jonathan D. Gordon are always on the lookout for the latest trends in the real estate world to drive massive success

Ruttenberg Gordon Investments has invested in many different properties and types of properties, including a number of mixed-use residential sites in the Chicago area, outfitted for luxury living.

The worlds of investing and real estate are littered with clichés, and “always be closing” stands among them. But neither Alec Baldwin nor David Mamet could have anticipated the constant, vibrating energy—propelled largely by a trove of real estate data—passing between David Ruttenberg and Jonathan D. Gordon.

The duo joined forces under the banner of Ruttenberg Gordon Investments (RGI), the former a partner at Marc Realty Capital—which deals in real estate investing, venture-capital investing, and private-equity investing—the latter a music-industry insider and active investor. In the space of a single interview, they eagerly cycle through dozens of projects and even pass emails back and forth about upcoming deals, always ready to move on to the next one. “I personally don’t know how to be anything but aggressive,” Gordon says.

Jonathan D. Gordon, Ruttenberg Gordon Investments

Ruttenberg is involved as a partner in more than 250 properties nationally on his own, while the duo spend a lot of time scouting out properties, meeting with partners and operators, determining trends, and exploring new markets. The two were first connected when Ruttenberg needed a Los Angeles local to help vet a deal he was looking into; Gordon was brought on board at the recommendation of his cousin, Ruttenberg’s best friend from their time at Tufts University. Not long later, the pair were working to provide a large hard-money loan to a developer building a condo project in Chicago. “He needed it within a week, and we provided him with a $15 million loan within seven days,” Ruttenberg says. “Everything was smooth sailing: we got a very good internal rate of return for our team, and the developer had a successful project.”

Finding such win-win opportunities is key to the RGI approach. “The reason that we’re able to be so active and do so many great deals is because of our collaboration,” Gordon says.

All those deals also mean that Ruttenberg and Gordon have a massive amount of data to draw from. Their portfolio of investments and projects spans the country and covers categories from retail to residential, and at the base of every deal, of course, is the math. The first things the duo look at are the risk-adjusted return, the stability of the cash flow, and the use of the property. Marc Realty is currently targeting multifamily properties in prime locations in supply-constrained urban environments such as Chicago—and also restaurant spaces. “Restaurant spaces are really liquid and easy to fill versus, say, a clothing store,” Ruttenberg explains. “There’s a changing dynamic in retail. We’re very cognizant that retail has now moved toward food and beverage, medical services, and experiential.”

Of course, there’s another option that combines intelligent retail play with the stability and cash flow of residential properties: mixed-use condo developments with ground-floor retail space. And, beyond being great investments for RGI, Ruttenberg sees them as a major benefit to their communities. “We don’t like having vacancies in our portfolio; it’s not good financially, and it’s not good for the community,” he says. “As a property owner and a member of a community, you want to see life, you want to see activity, you want to see people enjoying the retail that a community has to offer. By people spending money in the community, they’re providing jobs, and the cycle continues.”

David Ruttenberg, Ruttenberg Gordon Investments

Focusing on the numbers behind each deal and ensuring they make sense is, of course, essential for any successful investment plan, but Gordon notes that it’s especially important in a market as complex as real estate is today—for both buyers and sellers. “The market’s a little spotty right now,” he says.

Some properties will immediately get multiple bids, and others may be more appealing to buyers because of competitive pricing. That comes in large part because sellers are currently putting on very low-interest loans. “Sellers need to get a price that’s big enough that it justifies them not taking out historically cheap financing and financing it for a long period of time,” Gordon says. “Whereas a few years ago most properties that were listed sold, we’re now seeing a lot of properties that are getting listed that aren’t necessarily selling.”

However, because Ruttenberg and Gordon work with intelligent data, they are willing to be patient, they can be creative with their deal structures, and they’ve been able to take on assets that other buyers haven’t seen, including many in Chicago’s crowded, complex market. One key condo project in the city’s West Loop neighborhood features 81 residential units and was 70 percent sold by the middle of production. They’ve been able to leverage the knowledge generated by that success to buy other properties in the area, too. In one deal, a partnership with R2 Companies, RGI secured 30,000 square feet of retail condos, and in another it partnered with restaurateur Anshul Mangal to buy and build a restaurant in the only building along Randolph Street’s trendy Restaurant Row that doesn’t already have one. “We’re leveraging that expertise of what’s going on in the neighborhood and the activity to buy more property in that specific area,” Ruttenberg says.

He and Gordon are also keenly aware of Chicago’s historic architecture, a boon for prospective tenants and a legacy worth protecting. One of their recent investments involved the construction of 106 clay-tile-arched concrete lofts in a former printing facility. “We were able to keep the exterior and a lot of interior elements from a beautiful, historic brick building in Chicago and then fill it with beautiful modern apartments,” Ruttenberg says.

They’re undertaking a similar renovation—in partnership with the Pears Family Office—to develop 132 apartments in a historically significant office building. “We’re repurposing the building to have ground-floor retail, second- and third-floor offices, and then apartments above,” Gordon says. “We’re very cognizant that there’s amazing architecture in a lot of the markets in which we’re developing, including Chicago. We think it’s super cool when you can retain elements of what was old and blend it with the new.”

All that culminates in a large amount of work. Gordon estimates that he brings in hundreds of potential deals at a time, which he and Ruttenberg then evaluate to find the one that’s the best fit. The next step involves talking to the operations team, doing research, and cold-calling people for information. “At the end of the day, we look at the math, and if the math makes sense, we go to the next step,” Gordon says.

And while the numbers, markets, and trends all need to work out, all those deals rely just as much on people. “We’re concerned about having good partners and treating those partners in a very conscientious way,” Ruttenberg says. “That’s part of our secret sauce. We don’t take the last dollar, and we’re very generous to our partners because we want to make sure that they come back to us for the next deal—that we’re the only phone call that they make.”

Photo: Erik Unger