It is not surprising the top 10 ranked developer Stephen Wellington, drew a large and attentive audience when he recently spoke at UST’s Executive Insight Series on development and property management.
For those who have not yet had the opportunity to meet Steve, he is an impressive and literally towering figure. With a brilliant educational background (cum laude graduate of Yale University, a master’s degree in public affairs from the University of Minnesota and a second master’s degree from Stanford University’s Graduate School of Business), coupled with a largely successful professional track record – both as a entrepreneurial developer and as a leading public development official, all ears were finely tuned to hear what this CRE pro had to say.
As founder and President of St. Paul based, Wellington Management, Inc. (WMI), Steve communicated his company’s development and management approach as “disciplined and opportunistic.” Through buying right and managing intelligently, the company chiefly operates through a buy and hold investment strategy. Currently, WMI’s portfolio is valued at $375 million, including approximately 90 properties located throughout the Twin Cities metro.
Steve further attributes his company’s successes to responding strategically to market conditions. WMI professionals operate with a strong familiarity of the market and a comprehensive understanding of valuation. In turn, this insight allows appropriate response to the CRE marketplace. For example, recently there was an industry wide expectation that a “flood” of distressed commercial real estate properties would hit the market, however, according to Wellington and other leading CRE experts, this expected flood simply never came. In sticking to the company’s core operating principals, WMI appropriately responded to the market, and focused on development rather than acquisition.
One of such development projects currently underway includes the Lyndale Station (pictured). Wellington and his team acquired the former Kmart site at 66th Street and Lyndale Avenue in Richfield and executed a lease agreement (prior to closing) with LA Fitness for a new facility of 45,000 sf. Further, WMI is developing two additional retail buildings to accommodate other retailers at this visible and prime corner.
WMI brings a creative edge to meet market need, often executing deals other developers may not see. This is evident in the company’s successful track record with property conversions and successful re-zoning efforts. Ultimately, this affords the opportunity for WMI to redefine and develop existing inventory to meet new market demand. One such project includes the company’s project: Metro Lofts site was originally zoned as I-1. As the site was located on an ideal parcel of land– across the street from a park and along a transit corridor, WMI pitched a high density multi-family and mixed-use development which the City agreed to. This strategy often allows WMI to purchase real estate at lower price points and deliver feasible projects to the community.
Through WMI’s disciplined risk taking and opportune project selection mantra, WMI works to scoop up properties cheap. The company typically brings in 2-6 investors per deal, and operates between 60-80% leverage. Other current development projects in process include Roseville Crossing, Lyndale Crossroads, and Tartan Crossing Development.
To real estate students, Steve recommends blending both profitable projects with projects that have a personal or philanthropic meaning. Steve has been an active community volunteer and civic leader over the course of his career, serving as board member though numerous economic development community organizations including: Midway Chamber of Commerce, YMCA Camp Widjiwagan, St. Anthony Park Community Foundation, District Energy St. Paul, St. Anthony Park Bank, Regions Hospital, Macalester College’s High Winds Fund, Plymouth Church Neighborhood Foundation, and Drake Bank (a non-profit developer of affordable housing).
Steve started WMI in tough economic times (1984). When a student asked how he grew a successful business in the challenging marketplace, Steve laughingly responded, “If you start hanging on the edge of the cliff by your fingernails you learn to focus… you just get through it.” Today, Wellington Management, Inc. is ranked as one of the top ten real estate developers in the Twin Cities.