Brokering Diversity

Review Summary
Company. Franklin Street Financial Partners
Industry. Commercial Real Estate
Key. Combining capital, insurance, management and brokerage services into one company helps Andrew Wright's firm create value.

It's too providential to pass up: when you hit a hole-in-one during your job interview, take the job.

That's what Andrew Wright did after knocking one down during a round at Westchase in Tampa and winning a position with Marcus and Millichap's Tampa office. Today, he's the chief executive officer of his own commercial real estate company.

Coincidence? Probably. Great story? Definitely. More to Andrew Wright than a lucky stroke? Most definitely.

In short: He's a young innovator who may change his industry. He's already managed to grow during the downturn.

When competitors ask about the structure of his business, Wright is always willing to reveal the secret formula behind what makes his company unique. And every time, he gets the same inquisitive response: Why?

Leave it to a 29-year old CEO to make competitors scratch their heads.

Wright's company is called Franklin Street Financial Partners, and the formula of a diversified approach combined with unique service offerings has taken the business from zero to more than $1.8 million in revenues since its 2006 inception.

Staffing is up from three employees at the start to 27 today. And the company is growing geographically, too, with new offices in Atlanta and Weston during the past six months.

In other words, the plan seems to be working.

Wright has built a business that provides capital asset, property management, brokerage, and — here's the curveball — insurance services, all under one roof. That composition has helped his company grow during one of the most difficult commercial real estate markets the Gulf Coast has ever seen.

Collaborative effort
There's a phrase that appears on each of Wright's business cards that, in a few words, says a lot about how Franklin Street operates.

On the right side, towards the bottom, in capital letters: COLLABORATIVE REAL ESTATE SERVICES.

That collaboration has helped keep each aspect of Franklin Street's business busy. The real estate brokerage side of the business closed on $26,177,000 in deals in 2009. The property management business oversees nearly 2 million square feet of space. In January alone, the insurance side has booked $2 million in premiums. And the asset management division has closed on the modification of roughly $175 million worth of loans — with $300 million still in the system.

Ideally, each of Franklin Street's clients would use all of those services. But even if a customer ends up going elsewhere for, say, property insurance, Wright is confident that the value added just from offering a bid helps develop long-term relationships with clients.

Indeed, it's that long-term view that that seems to be making the diversified model work.

Already in the company's short history, individual operations have seen dramatic changes in how big a chunk of the pot their revenues represent. But by continuing to support shrinking operations, Franklin Street is positioning itself for future success.

For example, Franklin Street Capital Advisors, the mortgage side of the larger business, was responsible for 97% of the company's revenue in 2007. In 2009, that figure essentially evaporated, plummeting to 2%.

While revenues may fluctuate, however, business relationships do not. The banking contacts developed by Capital Advisors continue to be useful resources for the real estate services operation, as banks look to either sell their holdings or obtain management services for them.

Talent doesn't fluctuate, either. And even if some aspects of the real estate market are proving difficult to profit from, there's always something out there — such as development, an arena the company is currently entering on a limited basis.

Of course, all that activity takes focused management and leadership. Perhaps that's why Wright doesn't point to any purchases or sales when asked about his biggest accomplishment.

Instead, it's all about putting the right people in the right places. “The best thing I've done,” he says, “has been the arrangement of talent.”

That means combining younger talent — represented by individuals such as Danny York, another former Marcus and Millichap employee, and current head of Franklin Street Capital Advisors — with experienced veterans of the industry like Bruce Keene, a leader for Franklin Street in property management.

That effort is an ongoing process. Just last week, the company forged a new relationship with Pappas Retail Leasing and Management, a business led by one of the Florida Real Estate Journal's “Top Women in Florida Commercial Real Estate” from 2007, Pauline Pappas.

Why insurance?
The diversified structure of the business makes Franklin Street unique from an operations perspective. But it's one particular service offering that seems to confuse the competition.

To Wright's knowledge, Franklin Street is the only commercial real estate company that includes its own insurance brokerage for commercial properties.

Whether or not the idea catches on with other firms at any point, the company already considers its own offerings to be extremely competitive with existing options. Wright says his company's policies can save customers up to 30% off their current rates.

The key there comes back to the business' diverse approach. By combining properties into larger groups under Franklin Street's property management operations, the company can create what Wright calls master policies.

It's not hard to see where the savings might occur in that scenario: a larger property management pool helps distribute risk, minimizing probable maximum loss and reducing the need for coverage.

Today, the company operates two master policies tied together by the management operation with total value approaching $1 billion. But even with that volume of growth, Wright says the insurance operation is still seeing resistance in the market.

The problem: convincing potential clients that they don't need as much coverage as they have.

He recently lost a potential customer because of that very issue. While his company was offering a 5% deductible to go with $50 million in coverage, the competitor won the deal by offering double the coverage—even with twice the deductible.

Even though Wright didn't end up closing the deal on the insurance sale — nobody wins them all — he is confident that his ability to force the competitor to lower its price resonated with the prospective client.

And when you're in it for the long haul, those sorts of moves can end up being valuable down the road.

Wright behind the company
Wright has envisioned the kind of company he'd like to run since he graduated from Miami University in Ohio.

But in between the cap and gown ceremony and enacting his business idea, there was first a short stint working at Marcus and Millichap's Tampa office.

From day one, Wright spent extra effort developing his own database of market information, taking on as much as he could as quickly as possible. “I've always been an aggressive person,” he explains.

Soon after, a departure was inevitable. Says Wright: “I was done being the assistant.”

That aggression and determination hasn't gone anywhere. That much is clear from the fact that Wright is trying to build a commercial real estate company in a terrible market. As he puts it, in describing what the competition is doing: “They're all running away from the hill, while we're running towards it.”

It's also clear from his approach to growth. When he talks about the inevitable learning process his company will go through during its expansion into Atlanta and Weston, the guard over his enthusiasm only lasts so long.

Soon after admitting that Franklin Street may be “done for now” in terms of geographic expansion, he adds: “I already have ideas about where we'll expand next, because we will expand.”

Perhaps most important, however, is what Wright hopes to accomplish.

Indeed, he seems to be walking the walk to go along with his talk about Franklin Street being a long-term play. Themes like reinvestment and frugality — concepts his colleagues seem to value as well — play big.

“I'm not wearing a Rolex, I'm not driving a Ferrari,” he explains. “To me, it's about legacy. I want to build something.”

“Really, it's limitless,” he says with characteristic confidence.

With continued careful growth and creative thinking, plus any luck left over from that round of golf several years ago, that sentiment could be true.