Real estate deal-making is in the family blood
Looking for an apartment? Alvin J. “Fritz” Wolff Jr. is. Or 1,000, more likely.
Wolff is chairman of the Wolff Company, the successor to Alvin J. Wolff Co., the real estate firm his father Alvin Sr. founded in Spokane 56 years ago. Fritz Wolff has a copy of a 1950 company balance sheet showing all of $16,684 in assets. When he joined the company at age 19 in 1967, Wolff still dealt mostly in single-family homes. The asset base had swelled to almost $10 million, including 250 rental units.
Today, buying or selling 250 apartments would amount to a good day’s work. In fact, it was a good day’s work recently, when the Wolff Company sold two San Diego apartment communities containing a total 272 units for $71 million.
The sale price was almost 50 percent more than Wolff had paid for those units just 18 months ago.
Deals like that have taken the Wolff Company a long way from the Spokane Valley offices where Fritz Wolff started his career 38 years ago, geographically and financially. Fritz and sons Fritz H., Jesse II, Peter, and Tom uprooted themselves, their families and most of the Wolff businesses five years ago and relocated to Scottsdale, Ariz. Although the family retains extensive ties to the Spokane area, Scottsdale has become base camp for a burgeoning family business.
“We’re something just shy of $1 billion,” Fritz Wolff says. Family holdings have included more than 7,000 apartment units at times in developments stretching from Florida to Seattle, but mostly in the Southwest. The company brokers only for itself, and has long since abandoned the single-family home business.
Wolff says the family focuses on markets where supply constraints will push rents up. Among the trophy properties is a waterfront complex in Marina Del Rey, Calif. Plans call for converting its 470 units into condominiums priced around $1.9 million each, plus retail space.
“An apartment site on the water in Los Angeles is extremely supply-constrained,” Wolff says.
The company also owns the high-end 38-acre Kierland Commons mixed-used development in north Phoenix, and choice properties in downtown San Francisco.
Operating from Scottsdale, Wolff says, puts company officials a brief flight away from most Wolff properties. Wolff did buy 2,100 units in Florida two years ago that were surplus to two merging real estate investment companies, but that was because the opportunity was too good to pass up.
He says the company may look at 1,000 deals a year, find perhaps 50 that fit its criteria, and invest in six. Lately, Wolff has been bottom-fishing in Denver and Boise, two overbuilt markets where he thinks selectivity will position the company for a tidy profit when the oversupply is absorbed.
“It’s just a matter of timing until a market comes back,” he says.
Wolff characterizes Spokane as a stable market without the supply constraints that would attract more investment by the family. But he notes he owns The Whimsical Pig apartments in the Spokane Valley, and expects to die with them still in his portfolio. The family has owned the prosperous Aslin-Finch Feed & Pet Supply Co. for years, and Wolff Corporate Housing continues to be based in Spokane. Corporate Housing leases 100s of units of apartment-like housing to governments and companies who rotate trainees or other workers through the Spokane and Boise areas.
“That’s grown into quite a business,” says Wolff, noting that Wolff Corporate Housing won the 2002 Small Business Agora Award from the Spokane Regional Chamber of Commerce. He says he stops in Spokane regularly to visit his father and attend Gonzaga University trustee meetings.
“I’m excited about Spokane,” Wolff says, adding that the company still does much of its banking at Washington Trust, all its legal work at Lukins & Annis, and buys insurance through Moloney O’Neill.
He says the family is not sure how much more to grow Wolff Company. When they moved to Scottsdale, part of the agreement was not working Fridays, Saturdays or Sundays. They throttle back during the summer, when the sons and families split for Florida, Seattle or Europe.
“It’s not about being the biggest. It’s about lifestyle,” Wolff says. “We have a good time. We enjoy working together.”
He says extremely capable executives from outside the Wolff family have helped make the company the success it has become.
Wolff also credits the company’s growth to investor excitement about real estate in general. With the stock and bond markets moving sideways, real estate has been the investment of choice. How long that continues, he’s not sure.
Higher interest rates will increase the cost of carrying properties. Eventually, tenants will not be able to pay, or will not pay, the higher rents needed to cover those costs, especially in the many markets where there are plenty of apartments available, Wolff says.
Meanwhile, Wolff Company remains fully invested in real estate, with the Washington, D.C., area beckoning. That market may be distant, but Wolff likes the profile.
“My guess is we’ll be there before long,” he says.
Just apartment shopping, you know.