Thursday, March 01, 2012
|Seattle Times||Daily Journal of Commerce Headline|
|Seattle offered good deals in 4Q for short sales, foreclosed properties||
Real Estate Buzz: Dan Ivanoff is just not the retiring type
|Foreclosures comprised smaller slice of 2011 sales||Contrary to appearances, Dan Ivanoff is not retiring, but he is switching roles.
Ivanoff and two colleagues — Schnitzer West Chief Investment Officer Greg MacDiarmid and Schnitzer Investment Corp. President Ken Novack — are forming a new company that will raise capital for a new generation of leaders at Schnitzer West.
This is a major change for Schnitzer West, the Seattle-based development, investment and management company that entered the market 15 years ago.
Ivanoff formed Schnitzer West with Schnitzer Investment Corp. of Portland. It has developed about 8 million square feet of space that is worth, well, a lot of money.
“I don’t know off the top of my head, but I’m sure it’s well over $2 billion and pushing $3 billion of institutional, investment-grade properties,” said Ivanoff.
Sale of the Bravern retail, by the way, will happen soon. Ivanoff said the buyer is a company that owns high-profile properties and has relationships with high-end retailers like those in the Bravern. Ivanoff expects the sale to close by the end of March. He said the new owner will ratchet up the competition with Kemper Development’s Bellevue Collection.
Schnitzer West has been on a selling spree. In the last year and a half, it has sold roughly $1.3 billion worth of property. Next up is the 1-million-square-foot Bothell office park Schnitzer North Creek. It’s the last stabilized asset in the company’s Northwest portfolio, and will be sold in phases.
Alan Cantlin and Pam Hirsch will be Schnitzer West’s new guard in Seattle. They come from different backgrounds: He’s a former Wall Streeter, and she was Ivanoff’s third hire, starting as a receptionist. With the company’s support, both earned executive MBAs, and now have the title of senior investment directors and managing partners for acquisitions and investment development.
They’ll focus on office and industrial. One of their first tasks will be re-permiting the M5 office site at Fifth and Madison in Seattle. Schnitzer West won’t start M5 without pre-leasing, but it is gearing up for a time when rents justify high-rise construction.
Can the company land traditional office users, such as law and accounting firms? Ivanoff is confident: “That’s why we’re doing it.”
There will be another new person in Seattle to lead the company’s new endeavor: buying land and preparing it for housing development. The company is working on a partnership with this person, Ivanoff said.
In addition to his new company, Ivanoff hopes to teach construction management/business classes at his alma mater, the University of Colorado, and indulge his passion for heli-skiing and motocross.
It’s been quite a ride for Ivanoff, whose family heritage is in ranching and the oil and gas industry in the Rocky Mountains. You can hear that in the words of Ivanoff today.
To see where Schnitzer West came from and where it’s going, we sat down with Ivanoff for a talk.
Why step aside now just as we’re entering a new development cycle?
I think there’s a more responsible calling than developing another 8 million square feet. The responsibility for me is about the 80 employees who helped the company get to where it is today. If you genuinely care about those guys, the right thing to do is get out of their way and let those thoroughbreds run. It’s logical for me to switch to the capital side. Ken [Novack] and I will put our heads together to raise capital to launch the new team as they write their business plan. While my focus is now on the capital side, I will help them on the buy side, as Alan and Pam request, offering input on investment opportunities.
Investors have been circling the single-family land sector since the crash, and some major players are here. Why do you think there’s still time to capitalize?
The market is unhealed, and it still has a long way to go. It remains a competitive landscape. The smaller players are not well capitalized, and larger builders can’t carry a lot of lots on their balance sheets. We can, if it’s right.
Development. Heli-skiing. Motocross. All high-risk endeavors. How big of a gambler are you?
I’ve been told that people think I’m this big giant risk-taker. I’m just really good at identifying risk and then mitigating it. The hallmarks of Schnitzer West are discipline and detail. The key is to know every step of the battle plan and then execute it that way. It’s the same with jumping onto mountain tops from helicopters or riding a motorcycle up a ridge line. Getting killed is not on my list.
If you could do it over again, what would you do differently?
I would not have done condos. We are really good at developing and managing income-producing properties. We were not so good at for-sale products. Condos are like building 200 single-family houses on spec all at one time, which you never see builders do. With condos, you can’t close out the project until all the units are sold. If we ever did condos again, we’d do it with somebody that’s really good at it. Also, I wish we had done more industrial.
When you entered the Northwest market, you surprised a lot of people. How did that happen?
For me it’s about beating expectations. When I got here, I worked for Birtcher Real Estate and developed Van Dorens Landing, a 2-million-square-foot industrial project in the Kent Valley. Most of the 8 million square feet we’ve developed at Schnitzer West is office. When we started down that path, people didn’t think we’d be able to perform, yet we went on to do successful projects, such as Civica Office Commons in Bellevue.
One of the most powerful things I’ve had working in my favor is people telling me I couldn’t get something done. That’s a significant motivator for me. This is as good of an outcome as I could have hoped for. I’m very satisfied with my life. At the end of the day, I would say it’s been one good rodeo.