Long-term goals and an altruistic set of corporate philosophies have given this real estate development firm decades of success. It might seem odd that realty companies would build something for short-term ownership, but for many in the real estate development industry, the idea is to be what Michael Staenberg calls a hamburger flipper, where a property is built and then promptly sold.
“That’s not our deal,” said Staenberg, president and co-founder of THF Realty. “We put money into the amenities for the communities our properties are in to help the environment and make our properties more inviting.”
THF Realty’s tagline sums up the company’s corporate philosophy well: Plan. Build. Lead. So whether putting up art, building bike paths, creating soccer fields, improving the landscaping, or taking environmental conservatism into account when laying out a shopping center, the company develops its properties with the mindset that it’s there to stay for the long term.
“Our properties are well positioned and well anchored with key retail tenants and have nice architecture and landscaping with green features in them, but they’re not necessarily award-winning designs,” said Staenberg. “However, in 10 or 20 years, you’re going to tell us, ‘Wow, it looks good still.’ That’s how we do business.”
When Staenberg says well-anchored properties, he’s not kidding. Almost every property includes a well-known retailer such as a Walmart, Target, Sam’s Club, Home Depot, Lowe’s, Kohl’s, or JCPenney. He refrains from calling the developments power centers, as he considers that a description of a property with 20 smaller box stores inside. “I’d call our properties regional locations with community tenants,” he said.
Due to its build-to-own philosophy, THF carefully assesses the entry points, strength of tenants, and the communities surrounding them before it makes a deal. In the end, it means many of the deals it’s offered are turned down, but during the economic meltdown of the past few years, when many retailers were closing up shop, only 14 mini anchors across THF’s 100-property portfolio closed.
“We use good judgment in site selection, how we build our properties, and how we choose communities,” said Staenberg. THF currently has six properties in development, one each in Colorado Springs and Rapids City, SD; and two each in Denver and St. Louis. Although they seem to be spread about haphazardly, THF uses a fairly simple strategy when deciding which properties to purchase: if you can’t get to the property in two hours on a plane from St. Louis, the company isn’t interested.
“One time zone, two hours, otherwise it’s too hard to manage,” Staenberg said. “We have a strict focus of doing retail projects with those constraints, and we don’t want to change.”
Since founding THF in 1991, Staenberg and his partner, Chairman Stanley Kroenke, have managed their business with the philosophy that money never leads; it only follows. If you do a good job with a property, you’ll be rewarded by how you’ve performed.
Part of what THF considers its performance is how it helps its retail tenants succeed. In addition to visiting its properties once a month, the company takes customer service surveys of its tenants to find out what they do and don’t want and how THF can improve its service. Any tenant inquiries are dealt with within 24 hours, no matter what the issue, and tenants have 24-hour access to their facilities in case of emergencies.
Staenberg said THF considers a lease a partnership agreement and as such provides complete transparency when dealing with its tenants. “We take a proactive approach because without our tenants, we wouldn’t have successful shopping centers,” he said.
“We build to own. I’ve been doing business with Walmart since 1978 and with Kohl’s for almost 15 years. It’s a business that I truly love, and I understand it’s all repeat business. I’m not just about what I’ve done for you today. I’m about what I’ve done for you yesterday, today, and tomorrow.”
At THF, there are no superstars, most valuable employees, or standouts among the 82-employee company because everyone is a superstar, most valuable employee, and standout. And with every step the company takes, it does so as a team.
“It’s a group approach,” Staenberg said. “Anyone of our tenants can talk to any of our employees. We talk to them all the time to find out how we can do a better job and what they’re looking for from us. It’s a team approach.”
Part of Staenberg’s confidence in his team comes from each member’s longevity with THF. Many employees have worked with him and Kroenke long enough to understand the particular expectations of the partners, such as what to look for when looking into possible growth: is the market overserved? Is THF putting retail space up just to put it up?
Staenberg is often surprised to see how other real estate firms choose their tenants, often going for what’s trendy at the time rather than picking a retailer that has staying power. “We want to make sure the retailer will be around for quite a while. We’re willing to take a lower return based on who the tenants are. That’s a different perspective than a lot of our competitors.”
Different perspectives are also what’s made it possible for Staenberg and Kroenke to successfully work together for more than 20 years. Kroenke handles the majority of the financial and brainstorming pieces of the puzzle, while Staenberg handles the daily blocking and tackling and overall strategy for new development. “We make a good team using the yin and yang approach to business,” said Staenberg.
“When we started, we knew we’d have steady growth by sticking to our core business philosophies: build to own, be the best at what we do, give back to the community, and try to be good corporate citizens.”