"Three Guys Show Up at a Bar-B-Q"
Recession No Obstacle to Entrepreneurial Grads
By Sarah H. Wright
Posted January 8, 2010
Sometimes the start of a serious business sounds like a stand-up comedy opener: "So three guys show up at a Bar-B-Q. One is a numbers guy from Florida. One's a hardhat guy from Massachusetts. One's a small town developer with an MBA. And they all decided to go to MIT for a year …"
Yet that's pretty much how Bryan Lee, of Lakeland, Florida; John Sullivan, of Tyngsboro, MA, and Mike Tilford, of Spokane, Washington, met and launched their real estate development firm, AspinWall Partners.
As candidates for the Master of Science in Real Estate Development (MSRED) at the MIT Center for Real Estate (MIT/CRE), the guys had gathered at a Bar-B-Q hosted by Tod McGrath, an MIT/CRE professor of real estate finance who was welcoming the 33 mid-career real estate professionals who made up the Class of 2009.
Like their fellow students, Lee, 28, Sullivan, 27, and Tilford, 29, brought different areas of expertise to the program. Chatting over the open Hawaiian-style pig roast, the three quickly discovered they all had the "entrepreneurial bug," as Tilford calls the ineffable mix of daring, imagination, and restlessness that fuels new ventures.
"While talking, we quickly shifted from where we'd been in the past to where we'd each like to go in the future. We all anticipated that the MIT/CRE environment would inspire us," Mike says.
Their fellow students also dove into MIT/CRE with optimism and excitement, Lee notes. "It takes a lot to decide to disrupt a secure job, a full life, for a year. Real estate itself is a self-selecting field. This program is even more so. It was great to discover we'd all made similar tough choices to be at the Center."
Lee, Sullivan and Tilford found they each planned to set out on their own after MIT. Successful entrepreneurs had inspired all three: Lee's father is a veterinarian with his own practice; Sullivan had worked for years for an independent builder in high school, and Tilford's father is an independent power line contractor.
As for their early solo ventures, Tilford had owned a horse-hauling business (he's a former rodeo team rider) and a college hot dog business that "catered to the 2 a.m. set." Lee founded a number of computer-related and real estate concerns. Sullivan often consulted independently on real estate and construction-related endeavors.
The "blink" test looked promising. Personal entrepreneurial experiences – check. Complementary and different professional strengths – check.
Lee has five years' experience in real estate valuations and analysis. His strengths include structuring and modeling real estate finance and analyzing complex cash flows.
Sullivan has extensive knowledge of construction management and how buildings operate. Having spent five years as a project manager on large-scale projects such as the Intercontinental Hotel and Residences and the Ritz Carlton Towers/Millennium Place, his strengths include pragmatism and a good eye for what's feasible (or not) in a project.
Tilford, who received his MBA from Boston University in 2008, has broad and large-scale development experience. Before coming to the MSRED program, he managed a $30 million entitlement and land development project as well as over $20 million of related acquisitions and dispositions. "He's the ten-emails-before-dawn guy," Lee says. "A great idea man."
Once the semester began, the three friends had little time to discuss the future as they kept up MSRED's killer pace. Designed for real estate professionals with solid experience in industry and, as the MIT/CRE website puts it, a "hearty appetite for hard work," MSRED requires both core and elective courses, plus a final thesis. Core courses focus on real estate economics, finance, design and construction, providing a comprehensive approach to the real estate development process.
Electives offer topics ranging from leadership and entrepreneurship in real estate to mixed-income and general housing market development.
Lee, a native of Florida and an accomplished surfer, was stunned and exhilarated by the program workload. "It was relentless. I used to exercise every morning at seven. That just fell away," he says. Likewise Sullivan, an avid skier and mountain biker, only saw the slopes when the trio went skiing during their MIT break. Tilford, the horseman, remounted just recently.
After graduation, physical activity eluded Lee again. Intending to visit some of the Asian projects he had studied at MIT/CRE, Lee set out on a motorbike in Hong Kong and ended up in a wreck. "It turns out you can't backpack with a broken clavicle," he says. "So I went back to the States and contacted John and Mike. We decided to start a firm of our own. It seemed like the perfect time."
The perfect time? Ten months after the 2008 market collapse? Tilford, the one who usually laughs first, laughs first. "Okay. Maybe we'd be pawing through the rubble of the market. We could still ask ourselves, 'What can we do better than others?' 'How can we help?""
"We were acutely aware of the condition of the market," Lee says. "We had to ask ourselves, 'How could three mid-career professionals with more ideas and energy than money be relevant?' We concluded first, there will always be capital for good ideas and second, we had the time and creativity to prospect for overlooked, non-traditional and broken deals. Third, companies may not be hiring but they still need qualified people to get things done."
AspinWall Partners, LLC, was founded in July 2009. Named for a quiet tree-lined street in Brookline, Mass., Aspinwall kicked into gear right away. The partners source off-market acquisitions for developers and outsourcing of real estate underwriting for firms.
Lee, Sullivan, and Tilford made immediate use of their MIT/CRE experience, their diverse backgrounds and their complementary strengths in prospecting for clients and projects.
Mutual understanding that entrepreneurship succeeds best through collaboration instead of the old "solo cowboy" model? Check.
AspinWall produced proforma modeling and analysis of a residential project in Greater Boston called Concord Commons and completed an income-based valuation to acquire and reposition a 10,000 square foot retail center. They're now working on a potential acquisition and repositioning project of a 100-room hotel in Vermont, and the rights to be the exclusive underwriting firm for a $10 million real estate private equity fund.
"We've already invoiced and been paid for work," Tilford says with glee. "We're motivating one another to be realistic and creative. We're out there, looking for ideas. Sometimes we reach out to CRE alums – they're great resources. Sometimes we just walk through city neighborhoods looking for undervalued properties. We're asking, 'Can we match this opportunity with someone in our network? Can we be involved in a process here?'"
The key, again, is we. The AspinWall principals credit their MIT/CRE experience – demanding group work, plenty of practice taking inventories of their personal assets and liabilities as leaders and as group members – for their confidence in working together and in working as a group with other groups.
"In development, you have to work with bankers, architects, investors, construction companies, and politicians. CRE's emphasis on collaboration is a great foundation," Sullivan says.
Post-graduation, the AspinWall Partners have received "excellent feedback from our professors and alumni," says Tilford, who is co-president of the MIT/CRE Alumni/ae Association. "We're very fortunate to have their suggestions and support. It's a wonderful network."
As for the serious business of business in a recession, the three MIT/CRE graduates aren't kidding around. Yet they are optimistic.
"We share the same obstacles as our clients," Lee notes. "The industry is changing dramatically. Fundamental demand is in question; valuations are murky, and the wave of debt maturities that cannot be refinanced keeps growing. But developers are a creative bunch, and there is opportunity in change. We're spending our time asking, 'What's next?' 'What answers can we provide to better serve clients?'"
