The former property manager is evolving into a full-service giant, with brokerage, investment and corporate services, too.
When a firm in Orlando was seeking 30,000 sq. ft. of space -- but representatives of PM Realty Group had only 25,000 sq. ft. available -- employees of the Houston-based company sprang into action. Utilizing some funds allocated for marketing, PM Realty hired a space consultant to analyze the needs of the prospective tenant.
"The planner showed them that they had some `dead space' they really didn't need and that they could fit into the 25,000 sq. ft. of space," recalls Rick Kirk, chairman and CEO of PM Realty Group. "They were ecstatic. The common approach would have been `Gee, you need 30,000 sq.ft. and we only have 25,000, so it won't work.' But our people became creative."
Such creativity might have been in short supply earlier in the decade -- but no more. PM Realty Group, which used to be known primarily as a third-party property management company, is gradually evolving into a multifaceted giant adept at not only managing a building, but leasing and brokering it, to say nothing of supplying investment, product disposition, and corporate services.
In other words, it's not your father's PM Realty any more.
Late last year, for instance, PM Realty Group acquired National Equity Advisors Inc. (NEA), a diversified real estate investment services firm in Chicago specializing in acquisition, disposition, due diligence and consulting services for institutional and corporate clients. Renamed PM Realty Group Investment Services, the investment arm is part of PM's continuing effort to strengthen and broaden its offerings.
"The acquisition of National Equity Advisors allows us to more effectively lead our institutional corporate clients through the entire real estate process, from acquisition -- management and leasing -- through disposition," continues Kirk. "This addition to our core service offerings provides our clients with a complete and enhanced menu of top-quality investment services for all their real estate needs."
With NEA, PM saw an opportunity to strengthen its business lines so that it could handle a myriad of transactions for clients. "We're now focusing not only on disposition, but acquisition and development," Kirk says. "We can acquire a property, manage and lease it and then sell it. We're in a position to go through the real estate cycle. We have a great deal of synergy. Nine times out of 10, if we help with the acquisition of a building, we're going to get the ongoing management and leasing."
Under the direction of Kirk, PM Realty Group has undergone a transformation as it struggles to retain its elite status in a changing real estate world. With 43 offices throughout the United States, PM manages more than 100 million sq. ft. of office, retail, industrial and residential real estate for blue chip institutional owners and investors. Clients include The Irvine Co., TIAA, CIGNA, AETNA, MetLife, Cornerstone Advisors, CalPERS, Exxon, Chevron, Chemical Bank, Merrill Lynch, Texas Commerce Bank and Goldman Sachs.
"PM Realty Group has continued to successfully expand its presence as a leader in the corporate services arena," explains Dennis Wootten, former director of office services for the Fritz Cos. "Most real estate firms walking into a corporate facilities management project think it is the same as a property management assignment when, in reality, there are significant differences and overlays of responsibility that simply don't exist in a property management assignment."
"PM Realty Group has been and continues to be a critical part of the Fritz Cos.' real estate function because they have developed a customized service delivery model designed to address Fritz's constantly changing real estate needs," Wootten adds.
J. V. (Sonny) Polnick, director of facilities management with Western Atlas Inc., which has had a 20-year relationship with PM Realty, says: "The resources of the company are impressive and the company strives to employ only the most seasoned industry professionals. They truly understand that their results today determine their success tomorrow."
Determining PM Realty's future success has been the focus of Kirk and a new management team that was 18 months in the making. A certified public accountant, Kirk joined the firm in 1995 after nearly two decades with Prentiss Properties in Dallas. He was recruited by former Chairman Mike Lutton, who resigned from his post a year later after unsuccessfully trying to buy the company.
Kirk spent last year working on the infrastructure of the company as well as developing a long-term strategic plan. The corporate hierarchy was revamped, a new head of investment sales was appointed, and changes in national public relations and informationaltechnology were undertaken. "We got out of the tenant rep business," he adds. "We terminated a number of alliances and joint ventures that didn't fit into strategic plans and sold our janitorial company, FMS."
Today's team includes seasoned real estate veterans. Thomas M. Kennedy is executive vice president and CFO. J. Ernest Johnson, former president of the Western division, has become president of Corporate Services, while Jimmy Gunn has been appointed president of national Property Services. Rounding out the corporate team are Robert C. Cardwell, asset management president, James O. Dismukes, senior vice president and national director of operations, and John Gerber, president of Investment Services.
"We have a commitment to being in the service business, and the commodity we have to sell is our people," says Gunn. "Historically, PM didn't allocate any financial resources to training or quality control, but that's changed. We now have a training quality control program that's paying tremendous dividends in the quality of our performances. It helps in being able to differentiate ourselves from our competitors. We also invest heavily in technology and new systems."
PM Realty Group continually stresses its more than 40 years of experience, its size and its savvy. Even so, it's been tough going for companies like PM over the past 18 months as REITs and others have bought properties -- and then either managed them inhouse or changed real estate services firms.
Over the past year or so, PM has lost some 5 million sq. ft. of space, primarily due to asset acquisitions by REITs. "You're foolish not to be concerned about REITs because of their appetite and their cost of capital," Kirk explains. "Some of the trophy properties we've managed have been taken over by REITs. But that's a fact of life. One advantage PM Realty has today is that even though property is churning, we're making money on the disposition and the acquisition side."
There have been successes. The company started managing a small number of properties for new clients such as Lincoln National, Cornerstone Realty Advisors and Transworld Property, and then was asked to look after more. "Our Lincoln portfolio expanded from one property to 11 in less than a year," Gunn adds. "We also added a number of properties from Cornerstone."
The company continues to grow, Kirk notes, but there have been continual changes in PM Realty's directions and strategies. "We're much more focused on our various business lines, rather than trying to be all things to all people," he adds. "Our organization is structured to focus on clientele, not only from services, but new business development as well."
Above all, Kirk stresses a philosophy of profitability over size. "We're not as focused on square feet as much as we are on economics," he explains. "If we can make as much with 40 million sq. ft. as we can with 115 sq. ft. then we'll do it. Even though we've become a smaller company, we're still in the upper echelon."
Mike Sheridan is a Houston-based writer who contributes frequently to NREI.