Monday, June 23, 2014
By: Rich Laden
The Gazette
Ian Griffis and Buck Blessing didn’t plan a career in real estate.
A few months before Griffis, a drama major, and Blessing, a history major, graduated from Colorado College in 1985, they gave real estate a try. The pair – friends since they were roommates as freshmen – wanted to go into business together after school, Griffis said. Real estate seemed interesting, even if they didn’t have any background in it, Blessing said. Plus, as young guys without families, they didn’t have much to lose, he said.
They scraped together money for a down payment and secured a loan to buy a small house on Uintah Street, just east of the college, Griffis said. They planned to renovate the home and rent it to tenants as a source of investment income. They underestimated repair costs, however, and wound up soliciting investments from classmates, who were asked to ante up what they could, with a minimum buy-in of $500. Griffis and Blessing raised $10,000.
They bought the Uintah Street home on April 1, 1985, for $58,000, lived in it during the renovation and later rented it, Griffis said. About 18 months later, they sold it for $116,000.
“Why would we want to do anything else?” Griffis remembers Blessing saying after they cashed in on their investment.
They followed that first deal with more purchases, renovations and sales of properties near the college. They started to hear from parents of their classmates, who learned about the success of the deals from their kids. Instead of $500, parents wanted to invest $10,000, $15,000 or more, Blessing said.
“It just kind of got bigger and bigger from there,” he said. “The investments got bigger. The number of investors got bigger.”
Griffis/Blessing got bigger, too. With a business that now manages about $1 billion in multifamily and commercial property, and an investment side that has more than $500 million in its portfolio, Griffis/Blessing is one of the more successful real estate companies along the Front Range.
“They’re a bunch of bright people,” said longtime friend and Springs entrepreneur Gary Loo. “They recognize value and act on it when they see the opportunity.”
Ex-partners, current friends
Griffis, 50, sold his portion of the management company to Blessing in 1997 in what both say was an amicable parting; the two remain friends. Griffis continued to manage his own real estate investment portfolio, and later formed a Denver-based private equity, real estate investment firm in 2004, called Griffis Residential. Blessing said he kept the Griffis/Blessing name because it had a great reputation.
Today, Griffis/Blessing’s property management business, oversees about 6,000 apartments and 4 million square feet of offices, retail centers and industrial buildings, making it one of Colorado’s largest property management firms. Blessing, 51, lives in Denver and runs Griffis/Blessing’s office there, although he’s in the Springs weekly. There are no plans to move the company to Denver, he added.
The company also develops real estate, although it is a smaller part of the business. Griffis/Blessing and a partner built the 350-unit Creekside Apartments on the Springs’ east side in the 1990s. The company and another partner are building a 101-unit apartment project in south Denver.
The investment side of Griffis/Blessing, meanwhile, continues to grow.
Improve, enhance, sell
Griffis/Blessing officials look for undervalued properties that are run down, mismanaged or financially troubled, Blessing said. He and the company’s four top executives, along with an investor network that includes 150 members, then purchase the properties, improve them to enhance value and sell them typically five to seven years later.
The investment portfolio includes 35 properties, half of which are multifamily, said Gary Winegar, Griffis/Blessing’s chief investment officer. Investments typically return 6 percent to 8 percent per year per deal, with a return in the teens by the time a property is sold, Blessing said.
“We are out there to hit singles and doubles,” he said. “That’s the difference. Our investments are about generating consistent cash flow right out the door. We’re not trying to hit home runs. We’re just trying to have good, solid stable investments.”
Consistent cash flow
That philosophy took hold when the company began.
After buying properties near Colorado College, Griffis and Blessing purchased a small apartment complex north of downtown. They also began working for their alma mater – managing small apartment complexes used by students and others.
They later oversaw the acquisition of 37 properties on three city blocks for the college’s expansion, including homes and apartments that Griffis/Blessing also managed for the college, Griffis said.
“That gave us vital fee income and good experience during a difficult time and a formative time during our 20s,” Griffis said. “And with that income coming in, we could pursue our investments.”
At that time, Colorado Springs’ real estate market was spiraling downward as part of the nation’s savings and loan crisis, and several members of the local real estate community were hit hard. Blessing remembers watching “some very prominent people get very badly hurt and get at a point in their lives where they had a lot and they were losing it all. I vowed that wasn’t going to be me.”
They adopted a conservative approach. They heavily scrutinized and researched deals and limited their use of borrowing – a practice Blessing said continues.
Dave Lux, co-owner of Concept Restaurants in Colorado Springs, has known Griffis and Blessing since they worked for one of his downtown restaurants when they were in college. He became a friend and part of their investor network. Griffis and Blessing did their homework and diversified investments so that they were never overextended in one segment of the market, Lux said.
“They took risks, but they also hired real good people who knew as much or more than they did and made things happen,” Lux said. “They always have had great attention to detail and they’ve always been in a marketplace where they didn’t just stay. They learned to move around and be smart about their investments.”
Trusted advisers
When they began, Griffis and Blessing said they relied on advice from members of the local business and real estate community. One day, they set up lunch with Loo, whose family became millionaires after selling mail-order greeting-card and gift giant Current and its parent company Looart Press.
“We basically said, ‘tell us everything you know,’?” Griffis said.
Loo told them to create a board of directors with top-flight business people – a surprising suggestion because their fledgling company was so small, Griffis said.
“We didn’t appreciate that there were seasoned business people, successful business people that would be willing to help us,” Griffis said. “Gary explained that successful people usually enjoy sharing their wisdom.”
Loo and his late brother, Dusty, became influential mentors, Blessing said. Other veteran members of the business community – such as Steve Schuck, Jim Berger, Walter Kissinger and the late Gil Johnson of G.E. Johnson Construction – provided business advice.
Having a strong executive team also has been critical, Blessing said. Besides Winegar, other key executives include Steve Engel, president of investment services; B.J. Hybl, president and chief operating officer of property services; and David Bunkers, chief financial officer and senior vice president of financial services.
The four have extensive backgrounds in finance and property management, but working together for many years has helped propel the company’s success, Blessing said. Winegar came in 1992, Engel moved over from another real estate firm four years later, Hybl came in 1999 and Bunkers arrived in 2006.
Many of the company’s 250 employees, meanwhile, have worked for Griffis/Blessing for more than 20 years, which is essential to providing quality customer service to longtime clients, Blessing said.
Steady investor stable
Because they didn’t saddle their properties with too much debt or take unnecessary chances, Griffis and Blessing attracted a steady stable of investors and were able to borrow money at affordable rates, said David Lord, Colorado College’s business manager for more than 18 years and who started in his post about the time Griffis/Blessing was launched. He became a friend and investor.
“The way they’ve worked the financing makes it so attractive to an investor,” Lord said.
When Griffis/Blessing officials identify a property for acquisition, they send an email to investors – some of whom are prominent Coloradans – and invite them to join the deal, Winegar said. “That’s our blood,” Winegar said of their investors. “That’s what keeps things going.”
But investor relationships aren’t just about generating returns; being honest with investors and considering their interests is crucial to engendering their trust, Blessing said. At the height of the recent recession, several investors who committed to a $50 million Griffis/Blessing investment fund were sweating their personal finances, Blessing said. Those investors were allowed to exit from the fund without penalty, he said.
“We chose to release our investors from their commitments, so they could keep their cash in their pocket at that time,” Blessing said. “I think that was universally really appreciated.”
Fair share of setbacks
Like other real estate companies, Griffis/Blessing has battled through downturns.
CityGate, a mixed-use project on the south edge of downtown, has gone nowhere since it was proposed by the company in 2007.
During the recession, a 160,000-square-foot office Griffis/Blessing building in the Denver Tech Center lost two anchor tenants, which sent lease revenues and management company compensation plunging. But the company held onto the building while finding new tenants.
“During the downturn, people who took on more leverage or made big, risky bets lost those assets,” Blessing said. “While we felt some challenges, we did not lose anything.”
To keep income coming in during the recession, the company took over management of hotels, golf courses and other financially troubled properties for lenders, Blessing said. Company executives, meanwhile, took pay cuts and employee wages were frozen for three years. Nobody was laid off, he said, and the moratorium on raises now has been lifted.
“The pain for us,” Blessing said, “was less than it was for people who were taking bigger chances.”
In today’s market, Griffis/Blessing focuses on acquiring apartments. Young people who want mobility and don’t want to be tied to a mortgage, and empty nesters who are downsizing, are driving the demand for apartments. Rents are on the rise, making multifamily projects a great investment, Blessing said.
The company’s strategy to improve properties and increase value before they’re sold is key to successful investments – and company officials have it down to a science, Blessing said.
When it buys an apartment complex, for example, Griffis/Blessing upgrades the pool area with a barbecue grill, fire pit, umbrellas and cabanas – giving it a resort feel, he said. Some apartments will get new flooring, appliances, cabinets and window coverings.
Rents then are raised for the upgraded apartments, and renters typically will pay more for the spruced-up units. That demonstrates to buyers who come along later that there’s money to be made if they continue to enhance the units, Blessing said.
“We’ve just been doing this so long,” he said, “that we know what we can do and we know what people will pay us for it.”
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