Michael J. Kokes, managing principal of Homestake Capital LLC in Brielle, is the third generation at the helm of his family’s iconic homebuilding and development business in New Jersey. — Photo by Aaron Houston for Real Estate NJ
By Joshua Burd
Michael J. Kokes is well-versed in his family’s history in New Jersey — and there is plenty of it.
The Kokes family, one of the state’s iconic housing developers, built some 21,000 homes over nearly 55 years. The company has been privately held, publicly traded and then privately held again, enduring through a half-dozen recessions while remaining a constant in New Jersey’s real estate industry.
“We’ve seen a lot of different things,” said Kokes, the son of longtime president Jan Kokes and grandson of founder Miroslav “Michael” Kokes, who built the company’s first active adult community, Crestwood Village in Whiting, starting in 1964.
These days, the younger Kokes is focused on the family’s future. Through Homestake Capital LLC, a boutique real estate investment firm launched in 2015, he is leading its continued involvement in the industry as an equity investor, lender and developer. The firm has been involved in projects totaling $100 million in value in recent years and — following the 2016 sale of the family’s remaining portfolio of age-restricted lots — has built a new pipeline that is largely centered on rental properties.
Spanning roughly a dozen projects, the portfolio includes around 1,000 residential units and calls for both apartments and townhomes, Kokes said. Homestake’s plans also include self-storage developments and a farming operation, filling out a footprint that includes New Jersey, Connecticut and Colorado.
It all has the Brielle-based firm positioned for the future, although, not surprisingly, Homestake is taking a measured approach as it builds out that pipeline.
“I think one of the reasons why we’ve been able to survive for 55 years is that we’ve never been greedy and we’ve never chased the shiny ball,” said Kokes, who serves as Homestake’s managing principal. “We get projects, focus on them and drive them all the way through entitlement, development and then completion. That’s just how we are.”
The Kokes’ homebuilding business began in 1964 when Miroslav Kokes, whose family had fled a Russian-occupied Czechoslovakia after World War II, now famously broke ground in a remote section of Ocean County. Crestwood Village in Whiting was the first of many age-restricted, workforce housing developments for what would become one of the state’s most prolific builders, with Jan Kokes taking the reins in 1989.
Michael J. Kokes joined in early 2013, launching Homestake about two years later as a passive investment vehicle for the family. The boutique firm soon began to invest with outside developers who needed equity for their projects, which grew out of connections that Kokes made as a director with the now former Harmony Bank in Jackson.
“They had good projects, they owned the land, they were ready to finance from a bank and, basically, they just couldn’t get there because they didn’t have the right equity,” Kokes said, so Homestake came in as preferred equity to help get the developments off the ground. In doing so, the firm has focused on projects with a total capitalization of $20 million to $30 million, with the ability to buy in for amounts that are too large for a typical lone investor, but too small for an institution. Homestake has also dabbled as a lender, working with borrowers such as the Houston-based Liberty Home Builders, which used the capital to build 408 homes and open a new division in San Antonio.
By 2016, the family was also taking steps to sell the remaining assets of its homebuilding business, which was at a crossroads after being hit hard by the housing downturn. Drawing interest from many of the nation’s top homebuilders, the company sold a portfolio to Lennar Corp. that included about 500 lots across Manchester and Barnegat.
At that point, it sought to take a more active role in the projects in which it invested, capitalizing on the family’s decades of experience and name recognition.
“That goes a long way in this business when you’re talking to bankers and they know that you’re an established person,” Kokes said. “It’s better than trying to meet somebody fresh and start new, so I’ve tried to leverage our family history.”
Kokes also sees the company’s long-term outlook as an asset to the business. Homestake is able to invest in “solid projects” without worrying about their time horizon, he said, which makes the firm appealing to a wider swath of sponsors and partners. In sourcing opportunities, Homestake has sought projects in what Kokes jokingly called “the non-hot areas,” where there is less competition but strong fundamentals. For instance, the firm was an equity investor with Harvestate Group in the development of the Enclave at Winslow, a 105-unit townhome community about 30 minutes from Philadelphia.
“Everybody thought we were crazy,” Kokes said, but once the property opened in 2017, it leased up at rents that were around $150 higher than even the developers had anticipated. “There were no good comps in the market,” he added. “All of the product that we were going against was ’80s and ’90s garden-style apartments, and now we’re building something new and there’s a high demand for it.”
Homestake is sticking to that strategy as it turns its focus to self-development and entitlements. It’s now working in Riverside, a rail-served but also lesser-known South Jersey community about 25 minutes outside Philadelphia, where it’s planning 90 townhomes and 60 apartments. Meantime, the firm is in discussions with local officials in Lebanon to develop a site that was once slated for suburban office buildings, but is now better served by a different use.
“The reality is there’s no good competition in those markets, which is good for us,” he said.
Homestake’s office is a far cry from that of the Kokes’ homebuilding business, which had about 130 employees at its peak. The boutique investment firm has operated with a tiny back-office staff, but its recent growth has prompted it to expand. In early January, it announced the hiring of Clark McIntyre, a former executive with Roger Mumford Homes, who will work closely with Kokes in focusing on new development opportunities and asset management.
Kokes said his father remains an integral part of the business, but one who is also “enjoying retirement” and “perfectly happy” with a supporting role. You won’t find the elder Kokes filling out an insurance application, his son joked, but enjoying the chance to give his input on marketing or floorplan designs.
Both are also happy to see that Lennar is off to a fast start with the lots it acquired from the Kokes family. Kokes, who serves as president of the Shore Builders Association, notes that “one of the things that my dad has always tried to instill in me” is a desire to see collective success in the industry.
“We’ve always wanted other people to succeed around us and it kind of brings up everybody,” Kokes said, later adding: “Down here, we like to see everybody survive and do well.”