How investor sees his Fillmore project

NEIL MEHTA, the neighborhood billionaire investor who has been buying up storefronts on Fillmore Street for more than a year now, is the featured guest on the latest episode of the “Invest Like the Best” podcast, posted today. At the end of an hour-and-a-half discussion of his firm, Greenoaks Capital, and his approach to investing, he talks about his investments on Fillmore. Here are excerpts from that brief discussion in the final minutes of the podcast.

‘It’s remarkable what will be done on that street.’

I’m born and raised in San Francisco, so I dedicated a reasonable amount of money to trying to fix just my street in San Francisco.

Just to walk through the financial math: I’m buying buildings on one street called Fillmore Street. It’s in Pacific Heights. It’s a street I grew up on. And I’m buying stuff at a five and a quarter cap. Treasuries were five and a quarter when I was buying this stuff. I’m buying illiquid, small, rundown commercial real estate that usually has no tenant or if the tenant’s leaving, which is why the person’s selling me the building.

And then I’m putting in a mom and pop restaurant at a 3 cap, which barely pays its rent, and I have to do all the TI [tenant improvements]. This is a terrible financial investment.

So people were like, “Oh, you’re so good for doing this.” No, it makes no sense to do it any way other than a nonprofit. So I started a nonprofit with a good friend of mine named Cody Allen. He came out to San Francisco during Covid.

I think San Francisco is a really important city. I think it’s important for America. I think it’s important because it’s ground zero for a lot of the most interesting people all over the world to come and build their version of the future.

And we’ve tried really hard to kill it. We’re anti-business, we’re anti-growth, we’re high taxes, we’re anti-family. A lot of things are going in the wrong direction. My view was these were imminently fixable and, if we fix them, it can make San Francisco great for a long time. And I don’t think you could take these things for granted.

I think losing San Francisco to some of the progressive causes that have plagued the city would be pretty bad. And so this was one part of my little corner of the world, starting to invest and make it better. But it came from a place of wanting to make that street beautiful. And if we can make that one street beautiful, then you could maybe do that across other parts of the city, and you could make the city livable for families and have people still there.

I started down that process about a year ago. I was doing it quietly because what was there to share?

San Francisco has this funny progressive bent, which is we’d rather have empty buildings than have someone own them that they seem to be too wealthy to own. 

And there was a guy, Aaron Peskin is the guy’s name. He was a politician. He’s out of office now. He had picket signs with my face on them, marching down the street, “billionaire taking over city.” And I wasn’t doing any of that. I think they thought I was trying to develop the city. They never reached out or called or talked about it, but I was just trying to preserve that street and make them restaurants.

And I think what I take a lot of joy from is it has a very similar feel to Greenoaks. I’m backing other people that are building great restaurants, building a new theater. There’s a bunch of cool stuff happening on the street. It’s three or four blocks now. It’s really remarkable what we’ve done on that street. I’m enabling other entrepreneurs to go build something that will delight people. This is at a little smaller scale than what we do at Greenoaks, but it’s been so much fun.

I don’t spend all that much time with it. I have a great team that runs it on a day-to-day basis. But I was just on the street yesterday and it was so fun to walk down and be like, “Oh, this is where this coffee shop’s going in and we’re doing an all-day diner and rebuilding the theater with a great partner. It’ll be really fun.”

Listen to the entire episode of the podcast here.

UPDATE: “Peskin seeks retraction“