Metropolitan Ushers In A New Era Founder’s Sudden Death Passes Torch To Second Generation

C. Paul Sandifur Jr. was groomed for a time like this.

Since 1980, when Sandifur joined his father’s company - Metropolitan Mortgage & Securities Co. - the former Century 21 agent was tossed into developing real estate and managing money with little training or direction.

The experience, Sandifur said, taught him how to handle adversity without running to his father, C. Paul Sandifur Sr., for help at every turn.

That training will be invaluable in the days ahead as the 53-year-old president and chief executive officer of Metropolitan guides the giant real estate, insurance and investment company that his father founded 42 years ago.

Paul Sr., the 92-year-old chairman of Metropolitan, died June 2 with his wife, Evelyn, in an automobile crash.

“He’s a smart kid,” said Charles Stoltz, who at 87 is the senior member of Metropolitan’s board of directors. “He learned the hard way, and I think he’s better off for it.”

The loss of Paul Sr., considered the heart and inspiration of the company, comes at an important time for Metropolitan - and the city of Spokane.

Key real estate developments such as The Summit project on the north bank of the Spokane River are in transition while Metropolitan prepares to buy an Arizona insurance company and continues to raise $125 million in a public securities offering.

“They’re a major stakeholder in our region,” said Assistant City Manager Bill Pupo. “The projects and land that they have on the books translates into economic opportunities and jobs.”

During an interview last week, Sandifur said investors will notice little change at Metropolitan. His father in recent years had passed control and majority ownership of the company to Sandifur and his brother and sisters.

Sandifur personally controls 16 percent of Metropolitan, and manages the family trust, a 63.5 percent shareholder. A 5 percent stake held by his parents will be divided up among their children.

Metropolitan has 400 employees, assets of $1.1 billion and 14 offices in 10 states. It owns a life insurer and manages The Reserve Fund, a noload money market fund.

But most people recognize the company for its restoration of The Met theater downtown and development plans for the Summit, a proposed $100-$200 million urban village along the river between Monroe Street and Maple Street Bridge.

That project was dealt a setback earlier this year when state legislators refused to fund plans for a central state office building on the site. The 250,000-square-foot building would have been the cornerstone of the 90-acre Summit project.

Sandifur declined to elaborate on the Summit’s future, which would extend the popular Centennial Trail. But he said the company may have to change how it markets and develops the project, which was designed for housing, offices, restaurants and hotels.

“We’ll have to radically revise our plans,” Sandifur said from his glass and paneled office at company headquarters, 929 W. Sprague. “It’s a strategic piece of property.”

Metropolitan also is developing the MeadowWood properties near Liberty Lake. Several companies have moved into the MeadowWood Business Park in recent years and project manager Bob Luby said he has agreements to sell the last commercial site in phase of the project to a local company, which he declined to name. Separately, another investor has made an offer to buy a nearby 35-acre subdivision that’s platted for 110 lots. Company reports indicate that land is worth more than $1 million.

This summer, Sandifur said, Metropolitan will open a 22-acre factory outlet shopping center in Pasco and complete the acquisition of Arizona Life Insurance Co. in Phoenix.

Yet real estate development accounts for a scant 4 percent of Metropolitan’s assets. The bulk of the company’s business is selling life insurance and buying receivable contracts.

Competing against Ford Motor Co. and others, Metropolitan believes it is the nation’s largest buyer of receivables. Interest on these products produced $56.4 million for the company in 1994.

Receivables are bills or mortgages that individuals and institutions owe on everything from the purchase of homes and lake property to paying off annuities and lottery tickets.

Because of the risk, Metropolitan buys receivables for less than their face value, earning income off the discounted price and interest on the loan.

For instance, Metropolitan might pay $90,000 for a $100,000 mortgage to a seller who needs to cash out on the deal. As the borrower pays back the loan, Metropolitan pockets the $10,000 difference on the contract and the interest.

Metropolitan finances the purchase of receivables in two ways. It sells debentures, a type of bond, to investors and it collects premiums from its insurance subsidiary, Western United Life Assurance Co. Insurance premiums were $3 million last year, which included sales from Old Standard Life Insurance Co. in Coeur d’Alene. A company controlled by Sandifur recently acquired Old Standard from Metropolitan.

Metropolitan typically makes a lot of money. It’s profits for fiscal 1994, which ended Sept. 30, rose 37 percent from the year earlier to $5.5 million on revenue of $138.2 million.

Notwithstanding any surprises, Sandifur said earnings will be higher in fiscal 1995 as the company pursues its core businesses.

But tapping new, profitable ventures may be a challenge for Sandifur. His father was the company’s best deal-maker.

Metropolitan still owns, or has a stake in, some of Paul Sr.’s more spectacular ventures: Lawai Beach Resort, Kauai, Hawaii, and the Skier’s Edge Resort, Breckenridge, Colo. Those projects generate $2 million in sales every month.

Despite his age, Paul Sr. was negotiating deals to the day of his death. He wanted to build another resort on a sugar cane plantation in Kona, Hawaii; a hotel and boat cruise line on Lake Roosevelt; and possibly invest in the People’s Bank, a financial institution proposed by Spokane banker, Tillman Carr.

But those ventures may be put on hold as Sandifur works to keep company employees focused on what Metropolitan does best. In time, he said he may revisit certain projects just as his father did.

“He (Paul Jr.) is good at keeping his feet on the ground and pursuing what those ahead of him have done,” said Stoltz, the veteran director. “We’re in good shape with management.”

, DataTimes ILLUSTRATION: Photo

MEMO: This sidebar appeared with the story: METROPOLITAN’S EMPIRE Metropolitan Mortgage & Securities Co. is one of Spokane’s largest and most diversified insurance, investment and real estate companies. But many people know little about it. The following facts are taken from Metropolitan’s September 1994 annual report and May 1995 prospectus to investors: Number of employees: 400. Best known Washington property: The Met theater. Least known: six mobile home lots in Benton City. Downtown property management company: Beacon Properties Inc. Biggest states for buying receivable contracts: Washington, California, and Texas. Number of states where company holds real estate: 39. Number of repossessed houses in portfolio: 35. Number of repossessed grade schools in portfolio: 1. Debenture bond debt: $199 million. Projected funds from current public offering: $125 million. Net annual income: $5.5 million. 1994 federal income tax payment: $3 million.