How can a profit-seeking investment manager drive toward success for all parties?
It is because Arena is Freethinking, Collaborative & Vigilant
1. Freethinking
An expansive mandate calls for expansive thinking.
Arena’s investing is bound only by our ability to structure unique solutions across our eight business units, both on our own and with our numerous joint venture partners. We can operate across corporate private investments, real estate private investments, structured finance & assets, and corporate securities globally, and in almost any part of the capital structure. We are also equally comfortable acting as a lender, purchaser, merchant capital provider, or trusted trading counterparty.
For success across this wide universe, we encourage a fact-based, but fluid, approach. We conduct deep independent research, and we value open-minded analysis that may challenge typical assumptions. We seek to triangulate our views to ensure we are gathering multiple viewpoints on items of significance. This is how known opportunities are accurately weighed and hidden opportunities are revealed. We respect the lessons of history while not being bound by convention.
Our perspective does not always mean being contrarian—it can also mean operating in unique areas the herd will eventually follow, as has often been the case in our history (and the long history of our principals). That said, Arena never invests based on the fad of the day. We are dedicated to finding areas and instances of differentiated opportunity regardless of what conventional market participants may have concluded about them. That is what we call “Seeing What’s Possible” and what ultimately solves capital needs that would otherwise remain unfulfilled.
2. Collaborative
Working together isn’t enough. Working for one another is Arena’s way.
Arena is built for truly collaborative action, and that includes operating as an interconnected effort (across investment, asset surveillance/workout, operations, finance, compliance, etc.). We like to say, “Arena is designed to operate as an orchestra, not a series of instruments.” As an example, this allows each investment to have the requisite oversight and triangulation as it progresses through the process. For instance, our asset surveillance group is involved in the underwriting and onboarding processes to ensure they understand the investment and to ensure the right structure is in place prior to their taking primary oversight responsibility. Meanwhile, the front office stays involved post-funding. As another example, our independent valuation committee operates only with the coordination of asset management, finance, operations, and compliance (and also with the non-decision-making input from the relevant investment professionals).
This approach allows Arena to bring together capabilities that are typically disparate within investment firms—for example, the ability to extend financing to a borrower that has real estate holdings combined with a corporate royalty stream—and many of the unique investments we are able to source and underwrite come as a result of having an organizational design that is not siloed. We see this as a core advantage and a value-add for our borrowers.
From an operational standpoint, Arena’s end-to-end processes have been systematized and codified into an enterprise-wide workflow system such that roles, tasks, and processes are all defined and managed—facilitating our operating in this interconnected fashion while also being able to do so on a global basis.
3. Vigilant
How you account for risk is the real test.
While original thinking and collaborative action allow Arena to see and seize opportunities others might miss, another factor also drives success: a realistic, conservative, proactive, and holistic focus on risk.
We seek to practice what the Roman Stoics called premeditatio malorum, the premeditation of evils: envisioning hazards and responses up front. Anticipating pitfalls, we will aim to act quickly and effectively if trouble arises and step in to apply any required remediation ranging from loan amendments to full-scale foreclosure and asset re-optimization.
Risk management is thought of holistically and is the responsibility of individual employees depending on the specific risk control being employed (for example, tax risk is a function of Arena’s tax team). In addition, Arena relies significantly on having double and sometimes triple checks and approvals for critical risk items (with the movement of money being the most highly governed function around which all other processes build). During the life of an investment, “vigilant” doesn’t mean rigid or unwilling to adapt—in fact, the opposite is true. Being vigilant, to Arena, means treating stresses as opportunities to bring the same level of freethinking and collaborative action as when the investment was new.
