Keeping Pace with Market Trends
Now that “normalcy” has returned to the Carolinas real estate market after the Great Recession, the region is poised for accelerating growth for years, says CEO Pat Riley of Allen Tate Co., despite issues of new home affordability and a likely brief, cyclical recession in 2019. Construction labor is slowly coming back, materials are off-the-chart expensive, and land is back at pre-recession prices per acre. So new homes are now 15 to 18 percent more expensive.
A+ Difference: People, Vision Stength
Allen Tate Keeps Pace with Market Trends
Now that “normalcy” has returned to the Carolinas real estate market after the Great Recession, the region is poised for accelerating growth for years, despite issues of new home affordability and a likely brief, cyclical recession in 2019.
According to Pat Riley, president and CEO of the Allen Tate Companies and a former chairman of the Charlotte Chamber, the Interstate 85 corridor between Raleigh and Greenville, S.C., continues to attract a high number of corporate transferees, from young workers to retirees, who are looking for housing.
Charlotte is a Beacon
“Charlanta, the I-85 corridor, right now is the fourth most productive region in the United States and the 11th most productive region in the world,” Riley touts. “The 11th in the world, the fourth in the United States, the same gross output as the entire country of South Korea.”
“We don’t compete against the Triangle, the Triangle doesn’t compete against Charlotte, and we don’t compete against the Upstate. We don’t have what the Triangle has, the Triangle doesn’t have what we have, and we don’t have what the Upstate has, but together, we are a compelling story to the world.”
Raleigh leads the top cities for STEM (Science, Technology, Engineering and Mathematics) graduates. On the I-85 corridor, Chapel Hill-Durham is the only area below the U.S. rate in employment growth. The Charlotte region leads in employment growth, with the arts, theater, sports, food and entertaining and institutes of higher learning, which makes it attractive for young people looking for work and a place to establish themselves.
“Young folks are not buying until they’re sure about employment,” Riley says, adding that delaying marriage is an added factor. “They will come to the Carolinas and tend bar until they find a job. We’re just like Austin, we’re just like Nashville.
“They would rather come to the Charlotte region as a single person than stay in the Triangle. They might go back to Cary when they’re ready to settle down, but the reality is we are beacon for young people right here where you and I sit.”
The region is also second only to Florida in attracting older workers and retirees.
“We know about corporate moves, but there’s another move that nobody is keeping stats on and that’s the number of folks coming here to follow grandkids and kids, and coming here for second careers and to retire. Florida is the golden egg—it still leads the country—but the reality is we are the best alternative because of our cost of living and proximity to the mountains and beaches, quality medical facilities and big city amenities.”
Recession Bigger Than In-migration
Riley remarks that the population increases had made him overly optimistic about Charlotte’s resistance to recession in 2008.
“I had thought that we would not be participating in this recession,” he recalls, “that we were not ready to participate because of in-migration. Folks were coming here, 30,000 a year, right through the recession. But I was so wrong. This was much bigger than in-migration.”
Since World War II, Riley says, such bubbles in the housing market had been limited largely to the West Coast.
“All of a sudden, the roaring 2000s happened and we became part of what happens in California every 10 years,” Riley observes. “We used to snicker, ‘There they go again.’ San Francisco is up, then the bubble breaks and then it goes back down. And we, especially on the East Coast, said, ‘We’ll never participate in that.’ Well, the whole country participated in that phenomenon this time around.”
Allen Tate Co. had $4.1 billion in sales in 2004, and $5.71 billion with 24,500 closings in 2006. The housing market was on fire.
The rapid rise in housing values, encouraged partly by government efforts to increase home ownership, allowed folks to own a home that should not have. It also led many people to borrow against their home equity at unprecedented levels.
“What happened is homes went up so fast that our friends in the banking industry said, ‘You know what? What do we care if we lend people’s equity back to them? What do we care? If a home is going up 5, 10, 15, 20 percent a year, what do we care? What’s our risk?’” Riley explains. “So what we had for the first time in history, we borrowed the equity in our homes for this, that and everything.”
“That was solace for our old age. We gave that away. It was in some cases what we needed for a rainy day; we gave that away. So it was a double-edged sword because for the majority of Americans, their wealth is in their homes. It’s forced savings. That mortgage payment? So much goes to principal, and we’re not, as Americans, good savers. That’s why the mortgage was our safety net.”
Changes in lending practices, a downturn in the stock market that made real estate a more attractive investment; and record-low interest rates fueled the perfect storm. In those heady days, among other things, Allen Tate sold 331 condominiums in five weeks in a single Charlotte development.
“This was the perfect storm,” Riley comments. “The stock market went from 19,000 down to 8.5, 9, and what did we all do? We ran. We ran from the equities and where did we run? We ran into real estate. If we were wealthy, we were down in Naples, buying two condos instead of one. International money was coming into the four corners of America because they saw appreciation of housing and said, ‘Where can we have safe money in America?’”
The recession dramatically slowed home sales except in cases of necessity, such as death, divorce, relocation, or foreclosure, who would sell even when their homes were devalued.
“We were dancing for survival,” Riley recalls. “The only people who moved had to move.” Our company once had 51 offices—building wherever Harris-Teeter or Target identified a desirable demographic.”
We’ve consolidated to 37 offices in 2009, but since added four locations, for a total of 41 locations today across the company’s footprint in North and South Carolina.
Post-recession and Pent-up Demand
The post-recession economy is dealing with pent-up demands on several fronts, including the older Silent Generation that delayed moves to downsized housing because their longtime, paid-for homes’ values were depressed in recent years.
“They needed to move to assisted living or independent care,” Riley explains. “But they didn’t sell their homes, and we—as their kids—advised them not to because the homes were at the lowest values they’d ever been, so they didn’t make those moves.
“So that generation now is really active, and we as their kids should be pushing them to get to where they need to be. You can see from the facilities being built up and down our roads and highways that we are fertile ground for this type of housing.”
On the other end of the spectrum, the Millennials have delayed marriage and childbearing into their 30s, partly because of a bleak job market, high student loan debt, and the experiences of their parents’ divorces and job losses.
Millennials now make up 36 percent of the buying market, but they have been late to the dance. Historically, this age group would now be in their second or third home, not buying their first. Their delayed buying set up a nine-year gap, including the recession, before the typical pattern of a starter home followed by move-ups even began.
But the younger cohorts of this generation, in their early 20s, are making a different decision—buying a home as soon as possible.
“They’re not waiting,” Riley remarks. “They might not be in a long-term relationship; but as a single person, they’re buying. They want to get on this ownership bandwagon as soon as possible to take advantage of the appreciation that’s out there, as well as low interest rates.”
Providing affordable housing for that market is especially challenging because of increased expenses within the industry, in addition to tighter lending requirements. Labor, materials and land are all at or near record costs. And the appraisal lag of needed comps has been a drag.
“The headwind for young adults for home ownership is as strong as it’s ever been,” Riley points out. “For the first time in history, labor for new homes is at an all-time high. We lost a lot of our construction labor, a lot of it, and it’s slowly coming back, and materials are off-the-chart expensive, and land is back at pre-recession prices per acre. So new homes are now 15 to 18 percent more expensive than the same house down the street.”
Buyers have often paid premium prices because they wanted builders to provide modern features such as open floor plans, hardwood floors, outdoor living space, and connectivity, but many are now experiencing sticker shock at the price gap with older homes.
“When prices went down double-digit, what do you expect when the market gets better?” Riley asks. “They go up double-digit. The only persons that got hurt in the recession were the people who bought in 2007 or 2008 at the peak and had to sell in 2008 or 2009. The rest of us are back, and probably ahead unless we haven’t maintained those homes.
“Everybody’s predicting a 5 percent appreciation rate again this year. This is higher than we anticipated because historically since World War II, it’s been about 3.5 percent. So we’re still ahead of history, and that’s caused by lack of supply.
“We’ve got to get back up to that 1.5 million new home starts in America. We’re jogging; we’re not sprinting. We can’t get the land developed quickly enough. We can’t get through the permit process quick enough, and we can’t get the labor that we need, so it’s going to lag a little bit from demand.
“Let’s be really candid. Part of the inventory shortage is because the Baby Boomers are downsizing much, much later than earlier generations. While this will boost the condo market in the future, it’s a huge cause of lack of inventory.
“We’re starting our six-year, eight-year, 10-year trek,” Riley says. “We Boomers are much later than generations before us in downsizing, because we’re healthier and we’re living longer. We’re still out there playing and exercising and thinking that we’re in our 30s. We’re not ready to downsize yet. We are just starting our downsize trek. That’s why the inventory gap will diminish over time. We are just slow to the draw.”
Recovery With Reservation
However, many Boomers are remodeling to enjoy the upgrades now that will be necessary when it becomes time to sell, comments Riley.
“The condo market is typically the first one into a recession and the last one out. Lenders don’t like to lend on a condo project unless 40 percent of a building is owner-occupied. A lot of these towers that are built for conversion will convert in the next couple of years because there is a thirst for a home in the mountains or at the beach and a home here that I can lock and go visit my grandkids in whatever city they are, or to my getaway home. The future of condos is strong if they get built.”
With more than 80 percent of homeowners holding mortgages at very low interest rates, the decision to buy another house might become complicated if interests rates rise as expected.
“Never before in history have so many Americans been sitting in a home with mortgage rates of less than 4 percent. We have never had that. I don’t even know how it’s going to play out,” Riley muses.
“I hear the back-and-forth, ’Honey, we have a mortgage at 3-5/8 percent. Should we really buy this house at 7 percent?’
‘Seven is a point lower than the historic average since 1950 of 8 percent. Seven is great and we can still deduct the interest.’
‘But do we really need this extra bedroom? How big do we need this extra fireplace outside?’
“There’s going to be some discussions when you’re leaving rates under 4 percent. It’s going to be interesting how this plays out,” Riley says, more than a little curious.
Riley says that experts expect a cyclical recession in 2019 (similar to 1990 and 2000) as the government may have to raise interest rates to curb another inflation cycle. But it will last only about 18 months and not be in any way similar to the 4.5-year recession that started in 2008.
“What they’re figuring now is that by 2019, we are going to be in an inflation cycle again, and the only way America knows how to slow it down is to raise interest rates, slow down housing,” he explains. “Housing always goes in first. We always go in first—we’re the first one out, but we’re the first one in when it comes to a recession, and everything else follows.”
Last year, the firm had $5.16 billion in sales on 21,595 closings, the third best in its history. Riley expects another increase of 5 to 6 percent this year.
The improvement in real estate sales is occurring even though new housing starts are still far behind pre-recession levels.
“We used to do a million and a half new homes a year in America,” Riley says. “This year, we’re probably going to do 750,000. We’re millions of new homes behind in America. We are thousands short in our region.”
Riley summarizes the company’s performance: Allen Tate achieved near-record sales in 2015 with far fewer new home purchase opportunities and in a tightened lending environment. In the past two years, only one-fourth of buyers were putting down 3 percent or less—nearly twice that many were making such small down payments in 2009.
“This is doing it the right way, but this is also showing you how healthy the market is where you and I choose to live, work, and play,” Riley comments. “It’s a beautiful thing.”
Allen Tate Co., Inc.
6700 Fairview Road
Charlotte, N.C. 28210
Principal: Patrick C. Riley,
President and CEO
Recognition: Largest real estate company in the Carolinas; ranked #6 among the country’s largest independently owned, non-franchised brokers, and #13 among all brokers, based on closed transactions sides for 2015 (REAL Trends 500)
Business: Residential real estate and real estate-related services.
Turning Dreams into Reality
John Andrew Tammaro II, President and CEO; Gus Pappas, COO; Alan Simonini, Advisor (founded predecessor company in 1994)
Simonini Homes is serving the market with homes and whole neighborhoods designed to blend into traditional communities like Myers Park and Eastover while providing the sought-after livability of modern floor plans. Advisor Alan Simonini describes how people are used to nice things but want to downsize. He says, “I take great pride in making homes that look like the neighborhoods they’re going in. They fit right into the fabric of the neighborhood.”
Simonini Homes Turns Dreams into Reality
As Charlotte’s economy diversifies and recovers from the Great Recession, Simonini Homes is serving the market with homes and whole neighborhoods designed to blend into traditional communities like Myers Park and Eastover while providing the sought-after livability of modern floor plans.
Alan Simonini, who started building top-quality homes in Charlotte in 1994 and now is an advisor in the firm, achieved his excellence goals years ago—the National Housing Quality Gold Award (2002 and 2010), America’s Best Builder (2003), Builder of the Year (2006), and induction into the William S. Marvin Hall of Fame for Design Excellence (2010).
He’s still building on that experience, from new single-family homes and upscale renovations to high-end multifamily housing, luxury town homes in some of the city’s most prestigious zip codes. His accomplishments include City Homes on Kings Drive, Dilworth Crescent, and Stephens Square (named for the founder of Myers Park). Current projects include Lombardy City Homes, SouthPark City Homes, and the most recently announced 19 townhomes on 1.5 acres at Sharon Amity Road and Woodlark Lane.
“We’re known for our custom homes and renovations,” Simonini says. “But we also work for other developers to start developments from scratch that are in our area and price point. We’ve also been hired by some developers to fix and finish some stalled neighborhoods. Instead of building just one custom home, we’re building a whole neighborhood of homes. We’ve got a track record of that.
“We’re at a higher price point,” Simonini continues, “ranging from $500,000 to $1.5 million or more for homes from 2,700 to 5,000 square feet, with lot sizes from one-fourth to one-half acre. That’s why we typically do neighborhoods that are infill or gated or lakefront or golf course, because that’s where the more expensive homes are.”
Design and sales expertise give Simonini Homes an edge, he says. The firm has a complete design studio on Morehead Street where customers can choose their design preferences.
“That’s how we are different than most other custom builders in Charlotte,” Simonini says. “We have the designers and the salespeople. When somebody buys a home from us or does a renovation job with us, we’ll get the house designed for them, we’ll get the plans drawn and priced, we’ll do all the interior design they want. We can do a neighborhood because we have salespeople in the model who sell that neighborhood.”
Contemporary Inside, Classic Outside
These days, the typical desired interior design is a significant departure from the old days of formal living and dining rooms with L- or U-shaped kitchens. A common floor plan involves a big kitchen with a big island that includes seating, a family room, a family dining room, and an outdoor covered living space, all connected and flowing together.
“All of our houses have this module today,” Simonini says, adding that the style has arisen since 2006. “It’s a space that is comprised of where you live. It is a big kitchen with an island, so you’re not trapped by an L-shaped kitchen or a U-shaped kitchen, which is typical of years past. The kitchen becomes part of your living room.
“The kitchen looks right into the family room and the family dining room, which is the same size as a traditional dining room but it’s attached to the main part of the house. That creates one big rectangle, and they’re all interconnected. That’s where you spend 90 percent of your waking hours in the home.”
Depending on the floor plan, the family room might be 20 by 20 feet, the kitchen 18 by 15, the dining room 12 by 14, and the outdoor space 12 by 20. The outdoor space, accessed through sliding glass doors, can be used comfortably for about eight months of the year; some owners add heat sources for extended use.
While the floor plan is a break from the past, Simonini is committed to harmonizing with the traditional look and feel of the established communities where he builds infill housing on cleared tracts.
Years ago, he noticed that a California-inspired community of stucco homes in Charleston was not selling well; when Hurricane Hugo destroyed the subdivision, the traditional Charleston look replaced it and flourished.
“It was a lesson to me,” Simonini explains. “I said I’m never going to build something that doesn’t look like Charlotte. I take great pride in getting homes that look like Charlotte and look like the neighborhoods they’re going in. Those duplexes and townhomes look like they’ve been there a hundred years. They fit into the fabric of the neighborhood.”
When he started the Heydon Hall subdivision near Quail Hollow Country Club, before the recession, Simonini took pictures of his favorite homes in Myers Park, Eastover, and Dilworth and told the designer to make the new homes look like that, with modern floor plans. More contemporary designs can fit downtown or near SouthPark, he says.
Pursuit of Quality
Simonini, who grew up in Chicago, attended Culver Military Academy in Indiana, and earned a degree in biology at Arizona State University, got into the building business after his father, Alfred, who had retired from a family business, moved to River Hills Plantation and started building a few homes for sale.
“Back then, the builders didn’t finish the house and do what they said they were going to do, not on budget or on schedule,” he recalls. “I saw an opportunity to do something different. I went in business for myself and brought in a business partner who kind of ran the business, Simonini Builders.
“We decided to go for being a National Housing Quality award winner and America’s Best Builder, so we set about the process of doing that.”
When their first few applications were turned down, the pair of entrepreneurs studied the detailed comments and learned from them. Simonini says simply, “We improved those things.
“We got to be known in our industry around the country as having really high customer service ratings,” he touts.
However, the recession that devastated the housing industry nationally hit Simonini Builders hard. The company built 122 million-dollar homes in 2007, two in 2011. Fortunately, renovation work held steady.
“That business never really slowed down much during the recession,” Simonini says. “It was a bridge—we had the renovation work going all the way through there, so we didn’t go completely out of business.”
In response to the downturn, the owners divided Simonini Builders—Simonini remained with Simonini Homes in 2011, another part of the business became Classica Homes, and his business partner became a developer-broker for another builder.
John Tammaro, who earned a degree in building construction management from Purdue University in 1998, is president of the company. Gus Pappas, who has a degree in mechanical engineering and Spanish from N.C. State University and an MBA from UNC-Charlotte, is chief operating officer.
Last year, Simonini Homes did about 20 new homes and 20 renovations; Simonini says they expect to do 30 new homes this year, including townhouses. About half the firm’s 30 employees work in new construction, half in renovations.
“I wouldn’t say it’s coming back,” Simonini says. “I’d say it’s improved from the bottom. It’s not back, but we’re doing fine. We’re happy.”
Among other things, the firm has several homes under construction in Foxcroft and at Lake Norman, and plans are taking shape for a new townhome community in Cotswold. Demand is rising as a recession-triggered oversupply dwindles to undersupply because so little was built for years.
“It’s been a while of no building, so that’s kind of been absorbed,” Simonini says. “The market of available homes for sale has really shrunk a lot in Charlotte. The existing homes, there’s not very many on the market relative to the past. Not many, if any, are built on speculation, so there’s a limited number of new homes for sale.”
Choosing New Construction
Simonini Homes’ market is typically mature families with high school or older children, empty-nesters, divorcees, retirees, or young professionals with two incomes and no children.
“Our buyers are typically older because of the price point,” Simonini says, adding that among other things, they don’t care about the house’s school district. “The buyers used to be three-fourths from out of town—people moving here with the banks and businesses moving to Charlotte. Now it’s half the people. We’ve replaced some of the banking with the energy sector here in Charlotte. We have doctors moving here; the hospitals hire a lot of people. We’ve built a lot of doctors’ homes.”
Customers often choose to build when they see the total cost of purchasing and renovating an existing house.
“People look at a house that’s an older home,” Simonini says. “They almost always need some renovation. People are paying the market price for their home and then having to renovate it. Only a portion of what they spend renovating it goes to adding value to the house.
“Price is on a per-square-foot analysis. If you just redo the kitchen, you don’t get 100 percent of your money back; if you replace the roof, you get nothing back. There are a lot of things you do in a renovation, like replace the pink bathroom tile with white, where you don’t get your money back.
“People look at that versus building a new house. A new house becomes a little more attractive when you look at the old house plus the renovations, then the new house makes more sense a lot of times.”
While Simonini is building houses 5,000 to 8,000 square feet, in places like Foxcroft and Lake Norman, some buyers are downsizing but determined to maintain quality even when they reduce quantity of space.
“They live in a nice home in a nice neighborhood; they’re used to nice things,” Simonini describes. “They’re not willing to give up the nice things, but they may be willing to have a home half the size of the one they’re in.
“Perhaps giving up formal areas and a bedroom to go from 6,000 square feet to 3,000 or 4,000,” he points out. “They’re not willing to give up any of the finishes they had in their old house—hardwood floors, moldings, granite or marble countertops, nice hardware, solid doors.”
Newly-constructed homes are also energy efficient, environmentally friendly, low-maintenance, and more comfortable because they filter outside air into the space to compensate for the tight defense against outside weather, and because builders use water-based paints and other materials that do not emit the toxic gases of past construction.
“We’re not putting anything that can rot on the outside of the home anymore,” Simonini says. “The wood has been replaced with wood substitutes. The houses are all Energy Star, so they’re very energy efficient. They’re healthier to live in.”
In whole neighborhoods that Simonini develops, the yard maintenance is usually provided by the community—a practice that started before the recession that yields pleasant, uniform landscaping.
“In almost all our neighborhoods, your lawn is taken care of by the same person for the whole neighborhood,” he says. “You can augment that if you want, but your basic lawn care is taken care of by the community. If you want to have our own English garden or a vegetable garden in the back, that would be your responsibility.
“Everything looks uniform. Everybody’s yard is mowed at the same time. The neighborhood looks really good. This is another advantage of developing neighborhoods. It’s rewarding. People love living in them.”
Simonini Homes LLC
501 E. Morehead St., Suite 4
Charlotte, N.C. 28202
Principal: John Andrew Tammaro II, President and CEO; Gus Pappas, COO; Alan Simonini, Advisor (founded predecessor company in 1994)
Business: Construction and renovation of high-end homes, neighborhoods, and multifamily communities
A Sign of Good Things to Come
Thomas W. Camp, President and CEO; Stephanie Rhodes, Charlotte Regional Executive; Cecily Durrett, Director Relocation and Business Development
One of the most trusted brands in the world focused on building strong client relationships, Berkshire Hathaway HomeServices Carolinas Realty has been helping families in the Charlotte region find their dream home for over 36 years. According to CEO Thomas Camp, the company’s tag line, “We make great neighbors,” is their vision, striving to have a meaningful impact on the neighborhoods and communities they serve.
A Sign of Good Things to Come
Of all the events that take place in someone’s life, one of the most important and exciting milestones is buying a home, especially if that home is their first.
For most people, a home is not only their single largest financial asset, but it’s also where they raise their families and where life-long memories are made. Our homes, in so many ways, reflect who we really are.
But, by the same token, buying a new home or selling an existing home can be a daunting and stressful time in a family’s life, especially if it coincides with a job change or relocation to a new city.
Buying or selling a home represents a huge investment of time and money, and involves a long list of tasks that most people just don’t do very often. Helping guide a family through the home buying process is the job of a licensed Realtor, a real estate professional with the knowledge and experience needed to navigate the sometimes imposing world of buying or selling a home.
With one of the most trusted brands in the world and a set of values focused on building strong client relationships, Berkshire Hathaway HomeServices Carolinas Realty has been helping families in the Charlotte region find their dream home for over 36 years now.
An Admired and Respected Brand
Berkshire Hathaway HomeServices Carolinas Realty (BHHS Carolinas Realty) is a subsidiary of HomeServices of America (HSA), the second largest independent residential real estate brokerage firm in the United States. An affiliate of Warren Buffett’s Berkshire Hathaway, Inc., HSA was founded in 1998 when Berkshire Hathaway acquired two leading real estate brokerage firms in Iowa and Minnesota. After a series of subsequent acquisitions, HSA now owns over 30 subsidiary brokerage firms in 19 states.
BHHS Carolinas Realty traces its roots all the way back to 1979 as Wightman Helms, a Charlotte-based real estate company started by Muriel Helms, the first woman chairman of the Charlotte Chamber of Commerce.
After signing a franchise agreement with the Prudential Real Estate affiliates network, Wightman Helms became Prudential Carolinas Realty, later merging with Prudential franchisees in the Triad and Triangle to form a real estate company with a presence spanning North Carolina’s three most dynamic markets. In the spring of 2004, HSA acquired Prudential Carolinas Realty.
Just over seven years ago, Prudential Carolinas Realty acquired York Simpson Underwood, one of the leading real estate firms in the Raleigh-Durham-Chapel Hill market. York Simpson Underwood had been operating in that area since the early 1970s and had an outstanding reputation and brand in the marketplace. In order to leverage the existing brand equity, all of the Triangle area offices of the combined company began operating as York Simpson Underwood.
Then five years ago, Prudential Carolinas Realty acquired Yost and Little Realty, the leader in the upper-tier home market in Greensboro. Yost and Little had operated in the Greensboro area since 1928, so they also retained the Yost and Little name for that market.
“Warren Buffett’s operating model has always been to acquire solid companies with strong leadership and significant market share and let them continue to operate as they always have and continue to grow and prosper,” says Thomas W. Camp, president and CEO of BHHS Carolinas Realty. “That is basically our philosophy as well.”
HSA also acquired several other Prudential franchisees around the country, eventually becoming the largest Prudential franchisee in the United States. So when Prudential Financial decided to exit the real estate brokerage business, HSA acquired the entire Prudential Real Estate affiliates network. All of the old Prudential affiliates—including hundreds of independently-owned Prudential franchisees—became Berkshire Hathaway HomeServices beginning in September 2013.
“I really believe that our Berkshire Hathaway brand gives us a distinct advantage in the market,” says Camp. “Berkshire Hathaway is number three on Barron’s list of the world’s most respected companies, and it is the number three company on Fortune’s list of the world’s most admired companies.
“The reception of our name in the marketplace has exceeded all of our expectations. It is absolutely amazing the impact that it has had on attracting sales associates, who are the life blood of our business. But it has also helped with clients, both at the corporate level for relocation business, as well as the individual home buyer and home seller.”
Today, the company does business as Berkshire Hathaway HomeServices Carolinas Realty in Winston-Salem/Kernersville and Charlotte, as Berkshire Hathaway HomeServices Yost and Little Realty in Greensboro, and as Berkshire Hathaway HomeServices York Simpson Underwood Realty in Raleigh-Durham-Chapel Hill-Cary. But all three markets are consolidated as a single corporate entity with a consolidated management structure. They were recently recognized as the 11th-ranked Berkshire Hathaway HomeServices company in the country.
The company has 13 offices in North Carolina with over 790 sales associates. BHHS Carolinas Realty has three offices in Mecklenburg county—SouthPark, Ballantyne, and Lake Norman—with over 160 sales associates serving the Charlotte region.
A Value-Driven Relationship-Based Business
According to Camp, the company’s tag line—“We make great neighbors”—is more than just a catchy phrase. It is truly their vision of who they are as an organization. They strive to have a meaningful impact on the neighborhoods and communities they serve.
“We live by four key values,” he explains. “Number one, we are committed to exceeding expectations for exemplary service and professionalism in everything we do. Number two, we build lasting relationships, based on trust and care with our clients and the communities we serve. Number three, we partner with our associates to create an environment that fosters success and meaningful careers. Finally, most importantly, we exist to redefine home buying, selling, and ownership by integrating all of the elements of the transaction into a seamless real estate experience.”
This seamless experience includes not only traditional real estate brokerage services, but relocation services and a wholly-owned mortgage company that is the largest in-house mortgage company of any real estate firm in the country. They also have their own title insurance company and a private-branded home warranty company.
“We believe that the relationship always must come first,” continues Camp. “People do not buy or sell for our reasons, they buy or sell only for their reasons. So it is really important that, in a collaborative fashion, we get to know our clients, we find out what is important to them, and we get to know what their dreams are for a home.”
The last nine years have been difficult in the real estate business, but thanks to an improving economy and the success of BHHS Carolinas Realty’s relationship-based business model, 2015 was the company’s best year since 2007.
Almost $2 billion of residential real estate was sold statewide in over 7,200 transactions, and Camp says 2016 is off to an even better start. He adds that home values have generally recovered well from the recession, with the possible exception of the higher tier above $750,000. Available inventory is still a bit tight, so values should continue to move up.
Over the last year, new construction has made up only about 20 percent of sales because builders have been a bit slow initiating new projects. But Camp says builders are now finally starting to bring new inventory to market in greater numbers, so he thinks new home sales will begin to rebound toward pre-recession levels in 2016.
While the company’s average sales price for 2015 was right around $290,000 statewide, Camp says their sweet spot in Charlotte is in the $300,000 to $350,000 range. But based on the trends he is seeing in the market, he believes that the greatest growth potential is in the under $250,000 market, because that segment has rebounded more dramatically than others.
Helping Charlotte Grow
BHHS Carolinas Realty’s Relocation and Corporate Services Division assists companies and families who are relocating to or from the Charlotte region. In addition to helping someone find a new home or sell their existing home, the relocation team also provides group move management services, assists with temporary housing, offers orientation tours of the area, and many other services that help people cope with the stress that surrounds a work-related move. The relocation team also works with local economic development officials to help recruit new companies to the Tarheel state.
“Working with relocation is a special privilege in our business, because you’re working with families who are under incredible stress,” says Cecily Durrett, director of relocation and business development. “I have 13 folks across the state who get up every day to make sure those families can focus on the right things.”
“The trends we see are clearly on the uptick for Charlotte and the rest of the state,” continues Durrett. “It is a very exciting time because companies are figuring out that North Carolina is an inexpensive place to do business, and that the talent pool which we have in Charlotte and across the state is beyond compare.”
When a major international company was recently considering North Carolina for a headquarters move, Durrett and her team jumped into action.
“We put a team of agents together who knew the market inside and out to work with the advance team from the prospect and then with the firm’s principals who came in to learn more about the community,” recalls Durrett. “While that company ultimately chose Atlanta, in the process, we built some great relationships.”
Even though that relocation prospect went elsewhere, when their CEO learned that an old friend was also considering moving his company to North Carolina, he recommended that his friend talk to Berkshire Hathaway. Durrett began conversations with that second company, and they are indeed planning to relocate to our state.
“My job in part is to find those companies and those individuals who are beginning to have some curiosity about what it is like to live here,” explains Durrett. “We want to find them at a time when we can be helpful and be a resource to them as they make those very important decisions. Of course, we often do that work with terrific partners, such as the Charlotte Chamber and the Charlotte Regional Partnership.”
Making Great Realtors
The centerpiece of the real estate business is the individual Realtor, so recruiting and retaining top talent is critical to the success of any real estate business. But it’s also important to be sure that the Realtor is a good fit for the company culture and shares the same values. “We look for people that share in our values and that share in our ethics, our morals, and our professionalism,” says Stephanie Rhodes, the Charlotte regional executive for BHHS. “I tell them right off, relationships come first and transactions will follow. Our managers are all very hands on—they are coaches—so we can give our Realtors the support and attention to do well in the industry.”
BHHS Carolinas Realty uses their “Perfect Agent Profile” to aid in selecting the right Realtors to join their firm. They partner with a vendor that has a profile test called the “Core Capacity Index.” Over half of the existing sales associates have taken the test, so each new candidate takes this same five to 10-minute test to measure how they compare to the top performing agents. Rhodes says the test is not fool proof, but is a very good barometer of success.
“For 90 percent of the families we serve, their home is their largest single financial asset,” concludes Camp. “It’s their home. It’s their nest. It’s their shelter. It is where their deepest relationships exist, and where their most cherished memories are made.
“So we take that very, very seriously here. We as an organization are committed to the relationship with our sales associates, and every day we encourage our associates to focus on their relationships with their clients first. When we get that right everything else takes care of itself.”
Berkshire Hathaway HomeServices
3420 Toringdon Way,
Charlotte, N.C. 28277
Parent Company: HomeServices of America (HSA), a Berkshire Hathaway, Inc. affiliate
Principals: Thomas W. Camp, President and CEO; Stephanie Rhodes, Charlotte Regional Executive; Cecily Durrett, Director Relocation and Business Development
Employees/Sales Associates: 890
In Business: Since 1979
Offices: 13 offices across North Carolina’s three major markets as Berkshire Hathaway HomeServices (BHHS); BHHS Carolinas Realty in Charlotte and Winston-Salem, BHHS York Simpson Underwood Realty in the Triangle region, and BHHS Yost & Little Realty in Greensboro
Business: Full-service residential real estate brokerage firm, also providing mortgage loan originations, title insurance services, home warranty protection, and relocation services.
Transforming Into a Home Services Bundler
Michael Rogers, CEO; Frank McKee, President; Debbra Rogers, V.P; Andrew Rogers, V.P. Operations; Mat Rogers, Director of Marketing
Killingsworth Environmental has grown from a pest control to a full-fledged home services business that includes wildlife control, heating and air conditioning, indoor air quality, mold remediation, carpet and hardwood cleaning, water restoration, plumbing, electrical, and lawn care. “How we treat and care for our customers is everything to us,” says V.P. of Operations Andrew Rogers. “It’s our culture from management all the way down the line.”
The Home Services Superheros
Killingsworth Environmental Has Transformed Beyond Mere Pest Control
Like most businesses, Killingsworth Environmental of the Carolinas can attribute its success to wise decisions, smart financing, appropriate locations, technological advances, and good luck, but ask its owners and they’ll attribute it to a well-comprised staff and a customer service standard based on kindness and grace.
“How we treat and care for our customers is everything to us,” says Andrew Rogers, vice president of operations. “It’s our culture from management all the way down the line.”
“If you go to McDonald’s and you go to Chick-fil-A, you’re getting fast food at both locations; but if you go to Chick-fil-A, they put fresh flowers on your table, refill your drink, take your trash, and say, ‘Yes, ma’am,’ ‘No, ma’am,’ ‘Yes, sir,’ ‘No, sir.’ ‘Is there anything else I can help you with?’” says brother, Mat Rogers, director of marketing. “I liken Killingsworth to the Chick-fil-A of the fast-food industry.”
“Often in the business world, customer service is seen as something that doesn’t have a return on investment; something that you can’t track and attribute the continued success of a company to,” continues Andrew. “I completely disagree with that sentiment.”
Indeed, owners Mike and Debbie Rogers, CEO and V.P. respectively, have grown Killingsworth Environmental into an $18 million business. In addition, they have groomed a second generation for the leadership of their company in sons Andrew and Mat, under the steadfast direction of Frank McKee, the company’s president. While much has changed over the years, the standard of care has remained the same and will continue into the future.
Home Services Close to Home
The origins of Killingsworth Environmental go back to 1993, when Mike Rogers went to work for Killingsworth Pest Control of Florida, the largest advertiser for Rogers when he sold yellow pages ads for Bellsouth in Pensacola.
In 2007, he and Debbie bought out the North and South Carolina branches of Killingsworth Pest Control and renamed it Killingsworth Environmental of the Carolinas. Now their company boasts 9 branch offices, 182 employees, 146 vehicles, and a listing among Pest Control Technology magazine’s Top 100 companies based on gross revenue. Recently, the company has taken up spacious, new headquarters in Monroe.
Over the last decade, the company has grown from a primarily pest control concern to a full-fledged home services business that bundles pest control, wildlife control, heating and air conditioning, indoor air quality, mold remediation, carpet and hardwood cleaning, water restoration, plumbing, electrical, and lawn care.
Each of the company’s business sectors are separate profit centers and each has its own staff, resident experts, and sales brand. Customers can access one telephone number for a wide range of services needed. In fact, the company makes it easy for customers to benefit from multiple services.
Killingsworth Environmental offers preferred treatment for service “bundlers” and renewable services through the Killingsworth Bundling Plan, a star system providing a range of discounts and front-of-line appointments for seasonal services such as HVAC. This plan has resulted in a 30 percent increase in multiple-service contracts for the company.
Another area to which the Rogers attribute their success is technology. “We’ve gone completely paperless,” explains Mat. “Everything we do is done off of our iPads. It’s been that way for about five years now, saving us a lot of money in paper, and saving the trees.”
Andrew entered the family business right out of high school but was around long before that. “We used to pick up cigarette butts from the parking lot, and later, I did telemarketing while I was in school. I started as a technician in our pest control division. There’s not a lot about bugs I couldn’t bore you with,” he says with a smile. At 30, he now oversees all of the various divisions of the company. “It continues to be a huge learning curve,” he says.
Mat fought hard for many years to avoid the family enterprise, preferring to find and follow his own path. He went to UNC at Charlotte for his undergraduate and graduate work in graphic design. But the economy dealt blows to the field and jobs and clients were hard to come by. During lean times, he turned to substitute teaching and found that he loved it but that, too, was limited by the downturn in the economy.
Throughout, Mat had turned down offers from his father to join the business because there didn’t seem to be a job with the right fit. Finally, four years ago, he got a call from father asking for his help with marketing and social media. Now at 34, he is in charge of all marketing activities and says he can’t imagine doing anything else. All of the company’s marketing efforts are handled in-house.
One Big Family
McKee is the director of the group. He came on board in 2000; his wife was already employed by Killingsworth. He started out mowing grass, doing inspections in crawlspaces, and conducting pre-treats—in other words, at the bottom. Over the years, he has made his way up through every part of the business and management. Part of his work now, as president, is to guide Andrew and Mat as their Mike and Debbie step further away from the day-to-day business operations.
McKee is an excellent example of the company’s commitment to upward mobility. “Most people think of the service industry as a job that you’re stuck in,” says Andrew. “We actually have a path that people can take if they work hard and do the right thing where they can become upper level management.”
“We never bring an outside source in as management to our company,” agrees Mat. “One of the things we look for in new hires is the ability to grow.”
“We’re the second generation,” Andrew points out, “but nothing was ever handed to us. I never wanted to have someone answer to me that I didn’t already know how to do the job they were doing. I wanted it to be because I’ve earned it and that’s the way it is. Even with my 16-year-old brother, it’s not going to be “Come on in, here’s your management role.” He’s going to be working this summer pulling hoses and digging trenches.”
In addition to the 182 humans on staff at Killingsworth Environmental, there are six canine employees who carry their weight every day. With proper training, dogs can sniff out the chemical pheromones insects use to communicate. They are especially effective with termites and bed bugs, two pervasive problems.
Killingsworth Environmental obtains their dogs from the Florida Canine Academy which rescues dogs from pounds and humane societies. Once fully trained, each detection dog sells for about $10,000 and must be matched with a dedicated, full-time handler who flies to Florida to train with the dog.
“We have dogs that can differentiate between live and dead bedbugs, so after we do a treatment these dogs can actually go through and determine that there’s nothing left alive,” says Andrew. “It’s amazing how beneficial these dogs have been for our business. It’s a big investment. We have two new Labrador puppies being trained now.”
The company also utilizes heat systems that raise the heat to 140 degrees to kill the bugs. “Our guys are constantly going in the rooms, moving things around. It’s not a fun job, but it’s effective,” says Andrew.
Fortunately, Killingsworth Environmental was nearly unscathed during the recession. At the time it began, the company was doing a great deal of pre-treat work in the construction industry. That was the first industry to fall, but the Rogers adjusted quickly, increasing their marketing and sales expenditures and building up their sales staff.
Rather than pull back, they added new lines of service such as lawn care and mold remediation. For the first time, they assigned technicians and sales people to branch offices and required them to work leads and jobs only inside their own area, a significant change that led to savings in fuel, time, and fleet maintenance. It also increased sales. The company posted growth in every year of the recession and since. This past year saw an enviable 32 percent in growth.
The business hasn’t grown without challenges, though. “We spend a lot of time and money educating customers that each service has its own management team and staff. We need for them to understand that our pest control technician is not going to come and service your HVAC unit and the wildlife worker is not going to be fertilizing your lawn,” says Mat.
Another challenge is the rapidly changing regulations. “Most of our business falls under the North Carolina Department of Agriculture, and, of course, there’s OSHA,” says Andrew. “Rules can change quickly. There’s a lot of legislation going on as far as what types of pesticides we’re going to be able to use down the road. We try to do our very best to make sure we’re not spraying any flowering plants to try to help the bee population.”
The Rogers don’t worry too much about the competition. Not only because they are far ahead of any competitors in the number of services they provide, but also because of the industry’s statistics.
“In pest control alone, they say that only 20 percent of the population has professional pest control on their home,” explains Andrew. “Everybody else either doesn’t worry about it or they go to Lowe’s and buy something to use themselves. That leaves 80 percent out there that nobody has; that’s enough for everybody.”
A major goal for the next few years is to completely rebrand the company away from pest control to be perceived as a complete umbrella for home services. “Our goal eventually is to be lot line to lot line. We want to do everything within home services,” says Andrew.
Killingsworth Environmental also sets itself apart by how they handle maintenance service visits. While most companies do quarterly check-ups where the technician comes to the site, does his work, and leaves a note on the customer’s door, Killingsworth Environmental conducts scheduled check-ups occur only once a year.
But at each check-up, the technician meets with the customer and spends a full hour and a half on-site, answering questions, performing inspections, caulking gaps where insects might enter, performing maintenance treatments, and assuring the customer that they can call Killingsworth Environmental any time for follow-up or to address specific concerns.
“I feel that Andrew and I have been given a good bit of autonomy and a lot of trust from Dad to take some things by the reins and reshape things as we take on more and more responsibility,” says Mat. “It’s been a real privilege. I’ve always had respect for what they had done before. I still have that respect.”
“It’s been a real fascinating ride for all of us, Frank, and Dad and Debbie. Mat and I are really enjoying the fruits of trusting one another as well as the camaraderie that comes with family operating well together,” says Andrew.
Killingsworth Environmental of the Carolinas, LLC
1407 Airport Road
Monroe, N. C. 28110
Principals: Michael Rogers, CEO; Frank McKee, President; Debbra Rogers, V.P; Andrew Rogers, V.P. Operations; Mat Rogers, Director of Marketing
Offices: 9 offices in Monroe, Charlotte, Concord, Denver, Mint Hill, Mooresville, Pineville, Rock Hill and Gastonia
Revenue: $23 million
Customers: 73,000+ recurring
Business: Provides a full suite of home services including termite treatment, bed bug treatment, carpet & hardwood cleaning, mold remediation, lawn care, fire & water restoration, HVAC service, plumbing, electrical, and insect and pest control in the greater Charlotte area.
Seamless Integration of Expertise Yields Synergies
Scott M. Stevenson, Charlotte Managing Partner; David H. Conaway, Warren P. Kean, Steele B. “Al” Windle III, [Representative] Partners
Shumaker, Loop & Kendrick believes effective legal solutions come from fully understanding clients’ goals, visions, challenges, and obstacles, and knowing how to design answers that align with their values and culture. “Our firm’s culture is still deeply grounded in its Midwestern, straight-forward, no-nonsense work ethic,” confirms Charlotte partner Warren P. Kean. “We credit much of our growth and success on the foundation that was begun in Ohio.
Involved & Evolved
Seamless Integration of ExpertiseYields Synergies of Service
The law firm of Shumaker, Loop & Kendrick believes effective legal solutions come from fully understanding clients’ goals, visions, challenges, and obstacles, and knowing how to design answers that align with their values and culture. These solutions require nimble representation that quickly discerns the important issues from the inconsequential across a wide spectrum of business and legal disciplines.
Originating in Toledo, Ohio, over a century ago, Shumaker is a full-service business law firm and one of the 250 largest in the U.S., with five offices from Ohio to North Carolina to Florida. As its Charlotte office demonstrates, Shumaker’s emphasis on the seamless integration of expertise yields synergies of service for its clients.
Then, in the mid-’80s, when one of the firm’s partners became the CEO of a national company based in Tampa, it was a logical evolution to build a presence in the fast-growing Sun Belt, alongside its surge in manufacturing expansion. So, in 1985, Shumaker opened a Tampa office.
Recognizing the population growth in the Southeast region, and rapidly expanding growth of manufacturing along the I-85 corridor in the Carolinas, when one of Shumaker’s Ohio clients opened a plant in North Carolina, the firm decided to open a Charlotte office in 1988.
A decade later, the firm added a Columbus office to its Ohio service area, and the following decade a Sarasota office to its Florida service area.
Today the firm has over 245 attorneys, 60 paralegals and 500 employees firm-wide. The Charlotte office, just recently moved from First Citizens Bank Tower to Bank of America Plaza, boasts 35 attorneys and 75 total employees, with deep resources and support from its other offices.
“Our firm’s culture is still deeply grounded in its Midwestern, straight-forward, no-nonsense work ethic,” confirms Shumaker Charlotte partner Warren P. Kean. “We credit much of our growth and success on the foundation of high quality service and community involvement that was begun in Ohio, and seek to build on that in our legal practice here in the Carolinas as well as with our community involvement in Charlotte.”
Manufacturing, Construction and Mid-Market
“We serve many industries and practice areas,” comments Shumaker Charlotte partner David H. Conaway, “but what we think makes us stand out is our presence in the manufacturing sector, our presence in the construction sector, and our presence in the mid-market sector (companies with revenue ranging from $10 million to more than $500 million). Manufacturing, construction, and mid-market companies are really the heart and soul of Charlotte.”
Conaway specializes his practice in the manufacturing sector, regarding bankruptcy and insolvency, commercial litigation and contracts.
“We started out representing textile companies, and that’s how we began in the manufacturing sector,” Conaway explains. “We did a lot of insolvency work, representing creditors in bankruptcy cases. When I first came to Charlotte, in Chapter 11 proceedings you either represented the banks, or you represented the debtors, or you represented the vendors in the supply chain that provide goods and services to a company. We decided to focus on the vendor community.
“As the textile industry has declined, we have branched out to other industries, and that’s very complementary to what we do in Ohio,” Conaway continues. “Our Ohio office started out representing suppliers to the auto industry, so it was a natural fit. So now we represent manufacturing companies on anything having to do with their customers or anything having to do with their supply chain. It’s very often a crisis situation or a distress situation. It’s problem solving.”
As a rapidly growing Sun Belt city, Charlotte has long been a city driven by development. As a result, Shumaker’s construction law practice has been a key to their success here. They can represent any participant in the construction industry—from the time the land is purchased through negotiation of the contracts, through the construction process, project close out, final payment, and dispute resolution.
Charlotte native Steele B. “Al” Windle III is a partner in the firm’s Charlotte construction practice and is a graduate of Wake Forest University School of Law. After working for four years at a firm in Atlanta focusing on construction law, he returned home to Charlotte where he practiced solely in construction law for 15 years at another firm before joining Shumaker.
“We have a very strong construction law practice representing owners, architects, engineers, contractors, subcontractors, suppliers, and all aspects of the construction arena,” touts
“We represent many different size companies from very large to small on all types of commercial construction projects. However, our target market is the mid-level construction companies that are privately-owned and have anywhere from $10 million to $250 million in annual revenue. These companies are typically headquartered in or near Charlotte, but they do work wherever their clients take them.
If one of our clients has a project somewhere else in the country, we will go there to handle their legal needs. For example, we have handled cases for our clients in Bangor, Maine, Dugway, Utah, Gulfport, Mississippi, and Key West, Florida. We handle everything from negotiation of the contracts to project close-out and resolution of claims and disputes by negotiation, arbitration or litigation.”
Kean is part of the Charlotte business practice that focuses on middle-market companies and their owners. He came to Shumaker two years ago after spending his prior career with very large international law firms in New York and Charlotte because his passion is representing growing, mid-size companies for which Shumaker is a perfect fit.
“If the company has in-house counsel, we help service their needs,” he explains, “but more often, we’re dealing with substantial companies who do not have a legal department of their own. These companies rely on us to respond to the wide range of legal issues they encounter in operating and growing or selling their businesses.
“We are very much involved in financing, mergers and acquisitions, and other commercial transactions. We also bring to bear the expertise of our other lawyers as needed, including excellent litigators, to help prevent or resolve claims and disputes involving our clients.
“Then, there are the specialty legal services areas that businesses need,” continues Kean. “Employment law, employee benefits, intellectual property, data protection, franchise law, real estate and environmental law, and tax and exit planning, to name a few, are critical needs that we regularly service. This might be in conjunction with a transaction, in connection with some litigation matter, or arise on their own. For example, our employee benefits practice has been very busy with the Affordable Care Act in getting our clients up to speed as that evolves and impacts companies.”
Globalization and Other Trends
Increasing globalization continues to impact businesses of all sizes, and Shumaker is no exception. In addition to domestic clients who have cross-border business activities, an increasing amount of their legal work, particularly in the manufacturing practice, comes from foreign companies that have their U.S. headquarters or other significant operations in the U.S. and Charlotte area.
“It seems like almost every client touches something outside of the country, even if it’s just a supplier,” says Conaway. “We also have clients that are exporting, so globalization is huge. If, as a lawyer, you don’t have some kind of global capability, I think there are a lot of missed opportunities to add value for our clients.”
In response to these globalization trends, in lieu of establishing a brick and mortar presence abroad, the firm is developing Shumaker Global, a series of alliances that will allow it to serve its clients’ cross-border needs. “It’s evolving, but we made a conscious decision that we needed to have global capability,” states Conaway.
Many domestic law firms establish alliances with an international law group, but Shumaker decided to take a different path. It elected to slowly develop its own alliances based on the relationships that its lawyers have developed over the years with law firms around the world.
“A lot of our lawyers have had opportunities over the years to interact and do cross-border work,” explains Conaway. “They now know the lawyers abroad, so we organize all of those relationships. We have excellent overseas relationships including in Canada, Mexico, Central America, Brazil, and throughout Europe.”
“These are truly relationships that we have developed,” he continues. “We invest in them. We get to know them. We work with them. We add value for each other’s clients.”
In addition to globalization, Shumaker’s clients are feeling greater and greater pressure from investors to maximize profits. That impacts every aspect of their business.
It seems like Wall Street and private equity funds are having a much greater say in how companies are run,” admits Conaway. “We see a lot of companies that sell business units just because some shareholder in New York has told them to. As a lawyer, you have to understand that. You have to understand what is driving them and what pressures they’re under.”
Somewhat surprisingly, in the wake of the 2008 financial crisis, Chapter 11 bankruptcy cases have declined significantly nationally, principally, Conaway says, because lenders stopped providing debtor-in-possession financing. With near zero interest rates, companies could perform poorly and still get by, and on top of that, lenders kicked the can down the road because they didn’t want to write off bad loans against their capital reserves that were being closely watched by the Fed. Instead of bankruptcies, there have been a lot of work outs. Conaway thinks that is going to change over the next couple of years.
“From 2008 through 2011, the loans kind of stopped,” he observes. “Then they started making more loans, so now is about the time the loan cycle comes back and covenants are being breached. I’ve seen it before. It’s just a matter of when it hits.”
Finding the Sweetspot: Relationships
Shumaker, Loop & Kendrick has a very decentralized management and operating structure. The firm is managed by an executive committee made up of managing partners from each office. Most of the administrative and accounting staff is located in Toledo, but some key marketing and IT staff are located in other offices.
Shumaker is really organized by practice area, and with offices in three states, the firm can call on specific legal expertise, regardless of where the attorney is located.
“As an example, we have an excellent lawyer in Toledo who is a whiz on insurance for the construction industry,” explains Windle. “Whenever we have an issue involving insurance coverage, we get him involved and he comes down here. He’s even tried cases in the federal court here in Charlotte.”
“We’re at a size where we generally know everyone,” adds Kean. “We know who to call, and it doesn’t make any difference whether that person is in the office next to mine or in Columbus or in Tampa. I know where the expertise is.”
Shumaker fills an important niche between the large mega firms that may have 1,000 or more attorneys and the smaller, more entrepreneurial firms with 10 or fewer attorneys.
“We’ve seen a lot of consolidation and a number of larger firms have grown substantially. As a result, their focus is now on a different client base,” remarks Kean. “On the other hand, the smaller firms simply don’t have the capability to provide that full range of services that our core clientele need and demand.
“The middle has more or less been hollowed out, and that’s where Shumaker’s focus is. With 245 lawyers, we’re able to provide full service to businesses and business owners, and that remains our core focus.”
“The basis of our practice is relationships,” concludes Windle. “I’ve been practicing for over 30 years, and we still represent some of the same people from when I first started. We try to not only be a lawyer and a businessman—but maybe a little bit more than that, if only just a friend. It’s a relationship.”
Shumaker, Loop & Kendrick, LLP
101 South Tryon St., Ste. 2200
Charlotte, N.C. 28280
Principals: Scott M. Stevenson, Charlotte Managing Partner; David H. Conaway, Warren P. Kean, Steele B. “Al” Windle III, [Representative] Partners
In Business: Since 1925
Offices Established: Toledo, Ohio (1925); Tampa, Fla. (1985); Charlotte, N.C. (1988); Columbus, Ohio (1998); Sarasota, Fla. (2009)
Personnel: 35 attorneys and 75 total employees in Charlotte; over 245 attorneys, 60 paralegals, and 500 employees firm-wide
Recognition: Am Law 200 and National Law Journal Top 250 law firm; 114 AV Peer Review Rated by Martindale-Hubbell; 28 Board Certified Attorneys, 16 Certified Mediators and Arbitrators, 82 Best Lawyers in America; 53 Super Lawyers and Rising Stars
Business: A full-service business law firm with specific expertise in the manufacturing, construction and mid-market sectors.
Charlotte-Invested; A World of Opportunity
“We knew we had a really good team and an opportunity to grow,” says Babson Capital Management CEO Tom Finke, on moving from being bank-owned to insurance company-owned. Today, Babson has over $220 billion in assets under management, about half of which represent MassMutual’s general investment account, and offers global investment solutions. Headquartered in Charlotte, Finke comments, “It became clear this is where a lot of our growth has been and will be.”
More Than Investing… Invested
For Babson Capital Management, It’s a World of Opportunity
One of the less frequently recognized financial behemoths in Charlotte is Babson Capital Management (Babson). As one of the world’s leading asset management firms, with investment teams on four continents managing more than $220 billion in assets, Babson works with clients in countries across the globe.
The company offers expertise in a wide variety of traditional and alternative asset classes, including global high yield loans, structured credit, private debt, and real estate. Clients include both institutional and wealth advisory clients.
While Babson began in New England, the company is now headquartered in Charlotte and its presence will soon punctuate the Charlotte skyline with a towering office building providing penthouse views.
North Carolina’s increases are among the highest for the 37 states that rely on the Healthcare.gov website, according to government figures.
CEO Tom Finke’s ambition is to make Babson top-of-mind for institutional investors around the world seeking global fixed-income managers.
A Force to Be Reckoned With
Babson Capital traces its roots back 75 years to the creation of David L. Babson & Co., a Boston-based value equity firm and pioneer in growth stock investing. The firm grew steadily into a highly regarded investment manager, and was acquired by Massachusetts Mutual Life Insurance Company (MassMutual) in 1995.
In 2000, David L. Babson & Co. was integrated with MassMutual’s Investment Division, uniting two firms under a shared dedication to unwavering client service and long-term, fundamental investing.
The combined entity refined its expertise across both public and private asset classes by managing investment portfolios on behalf of the parent company MassMutual as well as a growing base of institutional investors.
The firm continued to grow both organically and through a series of strategic acquisitions, with two in particular significantly adding to the investment management platform: First Union Institutional Debt Management, an experienced leveraged loan and CLO manager in the U.S., Duke Street Capital Debt Management, one of the largest bank loan managers in Europe. These acquisitions solidified Babson’s presence in the world’s two largest high yield markets, and the firm was rebranded as Babson Capital Management in 2004.
With proficiency across the fixed income spectrum, Babson has continued to expand its investment capabilities over the last decade. To serve the needs of an increasingly global client base, Babson further extended its offerings in private finance, private equity and emerging markets.
Today, Babson offers a wide range of investment solutions to a client base that spans the globe. Throughout its growth, the firm has maintained a strict adherence to the bottom-up, fundamental analysis that has long been the hallmark of Babson’s investment process, and fostered a corporate culture that thrives on teamwork and collaboration.
Babson is part of the MassMutual Financial Group, which includes Baring Asset Management and Oppenheimer Funds. Babson also has two wholly owned asset management subsidiaries: Cornerstone Real Estate Advisers and Wood Creek Capital Management.
Charlotte Figures Prominently
Babson opened their first Charlotte office in 2002 when Wachovia sold First Union Institutional Debt Management (IDM), a 13-person boutique high yield loan manager specializing in leveraged loans and collateralized loan obligations (CLO). One of the co-founders of that Charlotte company was Thomas M. Finke.
A Pittsburgh native, Finke received his MBA from Duke University’s Fuqua School of Business in 1991, after earning his undergraduate degree from the University of Virginia’s McIntire School of Commerce. Prior to forming IDM, he held positions in high yield and loan syndications at First Union Capital Markets, Bear Stearns and Company, and Mellon Bank. But in the wake of the 2000-2001 recession, and after the merger of First Union and Wachovia in 2001, Finke decided he needed to find a permanent home for IDM.
“We knew we had a really good team and an opportunity to grow,” says Finke. “Babson offered an opportunity to move from being bank-owned to insurance company-owned. Not only did they want us as an asset manager, but MassMutual’s general account invested in leveraged loans, and they wanted a team dedicated to that. Part of the deal was we got to stay in Charlotte.”
Over the next several years Finke’s responsibilities at Babson grew, and in 2008, he assumed the role of chairman and CEO. The core management team being assembled in the Charlotte office included long-time business partner Russell Morrison, who was with Finke at First Union and who now serves as vice chairman and oversees Babson’s global fixed income and global private credit businesses.
In addition to Finke and Morrison, the team includes company 35-year MassMutual veteran Cliff Noreen, president; Anthony Sciacca, the head of global business development who also oversees private equity investments; Paul Thompson, the COO, CFO, and head of global investment services; Susan Moore, the chief administrative officer; Sheldon Francis, co-general counsel; and Christopher DeFrancis, co-general counsel and chief compliance officer.
“There was no specific intent to move the headquarters to Charlotte,” explains Finke. “It just turned out as we executed our business plan post-financial crisis, and as our leadership took form, it became clear this is where a lot of our growth has been and will be. There’s a very strong base of financial talent in this city, regionally we have great universities, and we have an airport which allows us to operate as a global investor.”
Just as the growth of Bank of America, Wells Fargo, and their predecessor banks drove much of the center city growth in Charlotte from the 1970s to the 2000s, Babson’s growth will soon bring a new addition to the Charlotte skyline—300 South Tryon—a new 25-story, 630,000-square-foot office tower located on the corner of Third and Tryon streets.
The site had been in the MassMutual real estate portfolio for many years; it was the first new uptown tower to be announced after the Great Recession of 2008-2009. Babson expects to relocate their Charlotte offices from the Duke Energy Center to the new tower sometime in 2017.
“As I looked at our long-term space plans, we needed more space,” says Finke about their plans to launch the new building. “Office vacancy was coming down fairly quickly, and when we did the fundamental analysis of Charlotte CBD office real estate, it made sense to develop a prime office building.”
Growth and Globalization
Today, Babson’s 1,100 employees offer a wide range of investment solutions to over 500 clients in more than 30 different countries. These clients include banks, insurance companies, pensions, endowments, foundations, sovereign wealth funds, and private wealth advisory clients.
Babson’s total assets under management have grown from $104 billion in 2007 to $223 billion as of the fourth quarter 2015, an average growth rate of about 10 percent per year. About half of Babson’s assets represent MassMutual’s general investment account, and the growth of MassMutual’s overall business is one important driver of Babson’s asset growth. Just over 60 percent of the external assets under management (those assets excluding the MassMutual general account) are from clients in North America; 26 percent are from Europe, the Middle East, and Africa; and the remainder is from the Asia-Pacific region.
But one amazing thing you notice about Babson’s growth is that, unlike other financial firms that suffered from 2007 to 2010, Babson continued to grow, fueled by large institutional investors in search of higher yields on their investments during the recession and the tepid economic recovery that has followed.
“Coming out of the financial crisis, investors were looking for higher yields and looking for investments that were less correlated to the equity markets,” explains Finke. “We also invested significantly in building out our local distribution business, and we now have about 100 people around the globe developing relationships with the largest institutional investors.”
Something else that helped Babson weather the crisis was their long-term, value-driven investment philosophy. Unlike some asset managers, the unique needs of their clients drive them to a more conservative investment philosophy.
“We’re not a hedge fund where we can just take our parlor chips off the table and go home when markets change,” states Finke. “Our clients are long term investors. You can’t go to cash in the general investment account of an insurance company. Our discipline has been built around the ability to manage through the cycle and adjust, both when times are good, and when times are not.”
In addition to their core asset management solutions, Babson has two wholly-owned specialized subsidiaries: Cornerstone Real Estate Advisers and Wood Creek Capital Management. Headquartered in Hartford, Conn. Cornerstone invests across all four segments of the real estate market—public and private equity and debt. Wood Creek based in New Haven, Conn., focuses on real asset investments, including investments in global agricultural resources, intellectual property, pharma, and reinsurance.
“There are a lot of interesting things going on within real estate,” Finke says. “Foreign money is looking for hard assets, so it just drives up the price of real estate in gateway cities like London and New York. The millennials are also driving growth in cities because of the re-urbanization process that is going on. We invest through cycles, so real estate is no different. It cycles relative to the economy, and it also cycles relative to what’s going on in terms of demographic trends.”
With offices in places like London, Sydney, Hong Kong, and Tokyo, Babson is truly a global business. Through those offices and their other U.S. offices, they are closer to their clients, but those offices are also where they are investing. Babson is a major investor in European high yield debt, Cornerstone invests in European real estate, and in Sydney and Hong Kong they invest in the Asian leverage finance market.
“When you think about the total business—Babson, Cornerstone and Wood Creek—we really have discrete teams defined by their functions,” explains Finke. “Global fixed income, global private credit, global real estate, and private equity are the key functions, but we do believe in being in the markets where we invest as much as we can.
“To sit in Charlotte and think you can invest in a middle market leverage buyout in Sydney, Australia, and do it well—that’s naïve. What you can do is find good people, share a system of how you invest—how you risk manage—and let them do their thing.
“We’re living through an extraordinary time of globalization,” Finke continues. “The technological revolution is bringing the world closer together, and because of that, you see more money flowing from one part of the world to the other. Over the last six or seven years we’ve seen many of our clients in the U.S. look more towards investing in the European high-yield market. They didn’t do that before.”
Finke explains how when investing globally an investor or an investment manager must also be mindful of the macroeconomics connected to the political events in those countries—whether it is the unrest in the Ukraine or the economic and political issues in Greece.
“You always have to assume something will go wrong, because something’s going to happen,” says Finke. “When we build portfolios, we have to consider how this company will perform if we have a real disruption in the Middle East and oil prices spike up.
“You have to build portfolios that have the ability to manage through tough times. We tend not to invest into trends; we invest in companies. We invest in projects, and we invest in properties where we can tangibly analyze the fundamental value.”
The World Economy
Where’s the world economy going?
“I wish I had a crystal ball,” laughs Finke. “What I’ve found since the financial crisis is no one’s right, and no one’s wrong! Every time there seems to be positive momentum somewhere in the economy, the next day you see a negative sign. The reality is the global economy is being exceedingly stimulated by cheap money in terms of low rates.”
“It used to be there was a real cycle coming out of a recession,” he continues. “There were layoffs, but then you’d get hired back. Well, this time, people didn’t just layoff—they reinvented. They became more efficient; they implemented new work processes or new technology; and some businesses completely changed their business models.”
Finke says that while it’s very hard to identify the drivers of growth in today’s economy, many companies are still well positioned to grow. So even though the overall economy may be stuck on a modest growth pace with fairly flat inflation, the key is to identify those companies with attractive growth dynamics that are not sensitive to negative GDP headwinds or low commodity prices.
“I think that’s why the feds have a real hard time here, getting off zero,” he admits. “It’s really hard to commit one way or the other, and to start pushing rates up.”
But in the final analysis, Finke says, no matter what the economy does, it all comes back to the client.
“We’re very proud of what we’ve accomplished since 2009. We wanted to create a presence as one of the leading global institutional asset managers, but that job is not yet done.
“Our goal is to build on what we’ve done before, and to take the disciplines of our investment process and the culture that we bring to what we do, and go to the next level—while always serving the client the best that we can.”
Babson Capital Management LLC
550 South Tryon St., Ste. 3300
Charlotte, N.C. 28202
Parent Company: Massachusetts Mutual Life Insurance Company
Subsidiaries: Cornerstone Real Estate Advisers and Wood Creek Capital Management
Affiliates: Baring Asset Management and OppenheimerFunds
Principals: Thomas M. Finke, Chairman and CEO; Russell D. Morrison, Vice Chairman, Head of Global Fixed Income; Cliff Noreen, President and Managing Director
In Business: 75 Years
Employees: Over 1,100 globally including over 500 investment professionals
Assets Under Management: Over $220 billion
Locations/Clients: Headquartered in Charlotte; locations on four continents and clients in over 30 countries
Business: Global investment management firm with expertise in a wide variety of traditional and alternative asset classes including global fixed income, structured credit, middle market finance, private debt and commercial real estate for both institutional and wealth advisory clients.
The Clean and Dry Pros Solve Problems
Dry•Pro Basement Systems are foundation and crawlspace specialists. Founded in 1999, the company has evolved into a comprehensive, one-stop-solution provider for homes and businesses that need some shoring up of their foundations—whether basement, crawlspace or slab—or suffer the musty scent and attendant damage of moisture problems. “We’re out there and people see us,” says founder and CEO Ron Weatherly Jr. “They want to use somebody they can trust.”
The Clean and Dry Pros
Dry•Pro Basement Systems Solves Foundation and Crawl Space Problems
Dry•Pro Basement Systems are foundation and crawlspace specialists. Founded in 1999, the company has evolved into a comprehensive, one-stop-solution provider for homes and businesses that need some shoring up of their foundations—whether basement, crawlspace or slab—or suffer the musty scent and attendant damage of moisture problems.
Founder and CEO Ron Weatherly Jr. says the award-winning business has comprehensive services for the full range of potential problems in below-grade construction, from shifting footings to softened wood structures to cracked slabs.
Most recently, Dry•Pro has started providing PolyLEVEL injected foam for stabilizing slabs, gained a general contractor’s license for its work, and expanded its offerings to include repair of damage when the basic problem is solved, such as tuckpointing once-cracked brick walls.
Foundation and Crawl Space Specialists
“Now we can handle the gamut of everything,” Weatherly says. “From the floorboards down, we can help with it.”
The company, which has grown to upwards of 60 employees, serves customers in a six-county area around Charlotte including Concord, Kannapolis, Hickory, Gastonia, Statesville, Huntersville, Matthews, Salisbury, Monroe, Morganton, Newton, Shelby, Kings Mountain, Mount Holly, Belmont, Lincolnton, Albemarle, and Indian Trail.
Dry•Pro is an Authorized Basement Systems dealer and offers services for both new construction and homeowners or business owners who have encountered problems in their existing structures. On-site inspections, consultations, and estimates are no charge.
According to Weatherly, much of his business comes from referrals through Realtors, HVAC contractors, pest exterminators, and former customers. Dry•Pro also works with Realtors to provide inspections and repair services for their clients.
Customers call when they notice cracks in drywall or brick, problems that often result from problems with the wood structure or the foundational piers. Cracks on the outside are more likely to result from foundation problems, while cracks on the inside usually reflect wood structure problems stemming from termite damage or humidity in the crawlspace.
Typical customer complaints include: “Every time it rains really heavy, my basement leaks or my basement floods.” Or, “Sometimes we get these musty smells coming from the crawlspace in certain rooms. Or, customers report that they walk in the house and everything rattles in the china cabinet. Or, “The door is not opening and shutting—you have to pull hard to get it open.” Or, “The windows on one side of the house don’t open anymore.”
Customers sometimes are working in the yard and see a crack in the brick that goes up to the roof or to a window. Or they see the basement wall has a crack down the center and is bowing in.
“With footings, typically you’re going to see a problem outside the home,” clarifies Weatherly. “The wood structural is going to be more interior cracks. But all customers know is that they see cracks and they need to get this fixed.”
Working on a Good Foundation
Dry•Pro has two wood structural crews who spend full-time on such repairs, unlike typical contractors who focus on interior home remodels. The preponderance of dirt crawl spaces in the Charlotte area can mean challenging working conditions in tight surroundings.
“We’ve really grown in that market,” Weatherly says. “That’s probably what sets us apart from a lot of our competition. A general contractor might do wood repair for a home once a month or once every couple of months. All we do is structural repairs under homes. The crew that works on that gets to be really good at it. Contractors don’t necessarily like to lie on their backs and do their work. They’d rather be doing a remodel.”
In addition to wall cracks, crawlspace problems can lead to foul odors in the house and even heightened allergy and asthma problems. When they are solved and the crawlspace is dry, the homeowner can see savings on energy costs and gain more useable storage space.
Moisture accumulates in crawlspaces because water in the air that enters from outside condenses when it encounters the cool air in the crawlspace. Mold that grows in those conditions is drawn through the house as air rises and escapes through roof vents. In addition to humidity from outside, water can get into a crawlspace through groundwater flooding or plumbing leaks.
The solutions can involve sealing crawlspace doors and vents to keep out moisture, removing standing water sources with a drain and sump pump, repairing areas of mold and rot in the structure, insulating the crawlspace and encapsulating it with a liner, and installing a dehumidifier for guaranteed dry conditions.
Weatherly adds, “If the structure is sagging, installation of Smartjack Crawl Space Stabilizers can solve the problem.”
When the problem involves the foundation’s footings, Dry•Pro enlists an engineer to design the solution as required by North Caroline guidelines.
“We drill into the ground until we hit good soil,” Weather explains. “We attach a bracket to the pier and attach it to the footing about every six feet.”
For example, the Push Pier System by Foundation Supportworks involves heavy-duty steel tube sections pushed through the inadequate soil to a more stable layer and attached to the foundation with brackets. Dry•Pro is a member of the Foundation Supportworks international contractor network based in Omaha, Nebraska, and its employees are certified by the agency.
If the problem is a bucking wall because of pressure from the soil outside, Dry•Pro can install a wall anchor system. Over time, the anchor can be tightened to return walls to their original orientation. If the repair needs to be finished more quickly, that can be accomplished by excavating the soil around the wall. Dry•Pro uses the GeoLock Wall Anchor System, which requires only a one inch hole in the wall for the rod that connects a steel plate to the anchor outside.
New Technology for Slabs
Homeowners and business owners also call Dry•Pro when they notice cracks in a slab floor.
“Most often, we drill a couple of small holes in a handful of areas and pump in a structural foam under the slab,” Weatherly explains. “It fills the void and raises it at the same time. The hole is roughly the size of a penny.”
Dry•Pro uses PolyLEVEL rather than another alternative, called mudjacking. Weatherly explains that mudjacking pumps in heavy cement slurry, which can lead to further movement, and requires a hole the size of a soda can. Also, PolyLEVEL is lighter—two pounds per cubic foot compared to 100 pounds per cubic foot—and expands in all directions.
Dry•Pro also uses this technology for concrete sidewalks, garage floors and pool areas as well as commercial spaces such as factory floors. PolyLEVEL cures in 5 to 15 minutes after application, compared to a full day’s curing for mudjacking, and the floor can be used in a half-hour.
“We’ve gotten some really cool results out of it and we’ve saved customers money,” Weatherly attests, adding that more commercial customers are beginning to notice the company’s service. “We can go in and put PolyLEVEL under the slab and lift it back up in most cases.”
Most impressively, demolishing the cracked concrete, removing the debris and bad soil, adding and compacting good soil, and pouring a new slab can cost between $5,000 to $15,000—the PolyLEVEL solution costs are significantly lower.
Dry•Pro also installs systems for removing water from basements, a more reliable and less costly solution than digging, applying paints or sealants, and backfilling. Modern solutions with extensive warranties involve drainage and pumping systems with alarms and sophisticated battery backup.
Perimeter damage, crawlspace and basement waterproofing systems come with a lifetime warranty. When the work is finished, Dry•Pro offers an annual maintenance program that includes checking pump operation, cleaning sediment and silt from the sump liner, changing the batteries in the WaterWatch Alarm, checking the discharge line to prevent freezing, inspecting for potential problems, and, with the SaniDry Basement Air System, when applicable, replacing the filter and oiling the equipment.
Staying Out in Front
Dry•Pro continually offers new services ever since its founding 16 years ago. It has added bowing wall repair, a mudjacking alternative, and many other foundation and basement repair products over the years.
“I do see us continuing to get into things,” Weatherly says, such as the tuckpointing that involves the art of matching existing colors so the repair is seamless. “We want to add services that help with the customer experience.”
Weatherly, who did landscaping, cleaning, and sales work after studying business at Austin Peay State University in Clarksville, Tenn., moved to Charlotte and worked in a textile business before starting Dry•Pro. He worked nights while getting the business off the ground.
A true family business, Weatherly’s wife Holly manages the office, and his father Ron Sr., a military retiree who joined in 2003, runs the production side.
Early on, Weatherly affiliated with the 300-member Basement Systems and Foundation Support Works International Contractor network for access to products, support and more than 1,000 hours of staff training each year. Basement Systems has been developing products for keeping basements dry since 1987.
Weatherly expanded the business into mold remediation and duct cleaning in 2006, when he bought the established AdvantaClean of Charlotte company, a diversification that left him less dependent on solving water problems only.
While the recession led to a brief dip in business, Weatherly says the service is not as sensitive to economic conditions as some home remodeling companies.
“If somebody’s got a problem, they’ve got to fix it, whether it’s now or down their road,” he says. “It’s their house, and it’s one of their largest investments. You can’t put off foundation repairs like a kitchen or bathroom remodel.”
Customers appreciate the longstanding company’s services. Dry•Pro has an average 4.8 of 5-star ranking among 125 Google reviews, and has received the Angie’s List SuperService award in 2005, 2006, 2008, 2011, 2012, and 2013. It has an A-Plus Better Business Bureau rating.
In 2006 and 2007, Weatherly was named Business Person of the Year by the National Association of the Remodeling Industry (NARI).
“We’re out there and people see us,” Weatherly says. “They want to use somebody they can trust.”
In the 33 years since starting Griffin Home Health Care, Inc. in the corner of The Peak Drug Store on Charlotte’s Graham Street, Bill Griffin has seen phenomenal growth, relocations and expansions, computerization, and too many changes in industry regulations to count.Under his leadership, the business has grown to include a centralized administrative hub and warehouse and three area showrooms. No small feats, indeed, but his proudest moment may be at hand as he prepares to turn the reins of the business over to his son, Richie, as, together, they launch a new business model.
Spanning the Generations
“It’s been so exciting for me to see my son as the rising star that he is. He’s made such progress towards the growth of the company. I didn’t imagine that this is where we would be today,” says Bill.
Griffin Home Health Care is a leading provider of home health care equipment, supplies and services in the Charlotte metropolitan area and services retail customers around the world. As the population ages and the baby boomers move well into their 60s, the need for wheelchairs, lift chairs, respiratory equipment, and other medical supplies and equipment continues to increase.
“In health care, we are full service from band-aids to hospital beds; wheelchairs to CPAPs; wound care to cast covers,” says Bill. “The business continues to grow in terms of products and services, with the advent of sleep apnea treatments representing the largest shift in emphasis within the medical equipment industry.”
Griffin Home Health Care has just recently moved into new administrative and warehouse headquarters on Monroe Road, not far from its former location. The 5,600-square-foot space anticipates the growth from the company’s new business model and centralizes the company’s operations including order intake, insurance verification, billing, purchasing, finance, human resources, warehousing and inventory.
Additionally, the company has three retail showrooms in the metro area. The new headquarters is only a stone’s throw from the new Charlotte showroom, 3,000 square feet in size and a completely new design. The company has also opened a new showroom in Concord on Copperfield Boulevard, and maintains a showroom in Gastonia on Ozark Avenue near Cox Road.
Bill has always been president and CEO with Richie as vice president and COO, but a succession plan is underway that will soon make Richie the company’s president and ultimately, the CEO. Bill’s brother, Jim, who joined the company in 1996, is secretary and formerly ran the Gastonia showroom. He now manages the showroom in Concord.
“Richie is running the business now,” says Bill. He has a vision.” Bill, at 64, and Richie, at 37, say they have been working towards succession for two years now. When at work, they call each other by their first names.
“It’s more professional than referring to each other as dad and son,” remarks Bill. “But I’m still his dad and he’s still the father of my grandchildren.”
“And when we are here, he’s still my boss,” laughs Richie.
Spanning Health Care Needs
In the fall of 2014, Richie was instrumental in successfully kicking off a new division of sports, health and wellness. “It’s a sister component of what we do,” says Richie. “I saw a niche for service on the health and wellness side. For 32 years we were caring for those who were injured, broken, or sick, but we were missing a big chunk of the family by not serving the health care needs of those who were well.”
With the increased emphasis on health and wellness, Griffin Home Health Care now carries a wide variety of rehabilitative and exercise equipment, pain management, wound care, braces and ambulatory aids, and also provides a team of highly trained staff to assure fit and proper use.
The company has brought in some nutritional products such as Bruk’s Bars and Honey Zingers, as well as CEP compression products and many other wellness related items. While some of their products are available in big box stores, Richie points out the lack of service there.
“If you go into a big box store for a product—be it a bath chair or knee brace—you can select it from the shelf and pay for it, but who’s fitting you for that? How do you know if the fit is right? You could do more damage than good if it’s not the right fit,” says Richie.
“Plus, oftentimes, there is a difference in quality,” he continues. “Big box stores do not have to be accredited and are able to sell products that are of a lower quality—not medical grade.”
In the respiratory division, the company offers with c-pap, bi-pap, oxygen concentrators and nebulizers—everything except clinical services and ventilators. Services are provided by service technicians who do routine checks to ensure that the equipment is delivering the right amount of oxygen.
“We do what we call ‘sunshine calls.’ Anybody that gets equipment from us will receive a call a few days after we deliver it to make sure they are doing well with it. More often than not we get commendations, and sometimes recommendations as to how we can do better,” comments Bill.
“What sets us apart from other businesses is our dedication to compassionate service,” he assures. “Our tagline is ‘Serving your family like family since 1983,’ and we firmly believe that if we serve our customers like our own family, we won’t make too many mistakes.”
The company maintains a significant level of inventory to meet the needs of its clients and prides itself on being special-order specialists. “We have folks here dedicated to finding what clients need quickly. That’s always been a niche of ours,” touts Bill.
Both Griffins say they don’t see themselves as sales people. “We have our own fleet of vehicles and client services technicians who are often the face of our business,” says Richie. “Our technicians are trained for ‘up-caring,’ prepared to discern and recognize the needs of clients. They help them assess their situation and environment to best utilize the equipment they need.”
“There is no outsourcing or contracting with drivers to simply drop things off,” continues Richie, “Part of our service is to show clients how to use the equipment in their own environments.”
Spanning the Health Care Industry
Richie joined the business in 2002 after attending Appalachian State University where he studied Interdisciplinary Studies and Sustainable Community Development and, ultimately, fell in love with the mountains. With a carpentry job waning during the winter months, he came home for a part-time job in his father’s business cleaning equipment and making some deliveries, and never looked back.
“I like that I can go home every day and know that I made someone’s day a little easier, a little safer,” says Richie. Bill says he was only a little surprised: “When Richie was in middle school, I took him to the Jewish Community Center where he worked with children with infirmities. I could see how well he related to others and began to have a flicker of hope that someday he would be interested in the business.”
As Richie became more a part of the business, he was instrumental in forming a vision for a centralized business model. He knew the first order of business was to upgrade the software behind the company’s medical billing and inventory management system to a cloud-based system. “It was a massive undertaking,” attests Richie.
Medical billing is critical because like many industries, medical equipment sales and service requires revenue streams from diverse sources to remain strong financially. Griffin Home Health Care relies on two large and powerful bureaucracies—government and insurance—for approximately 60 percent of its livelihood.
Another 20 percent results from contracts with hospice care and similar organizations, and the remaining 20 percent comes from private individuals.
Because of the company’s heavy reliance on governments and insurance, Griffin Home Health Care is involved in lobbying efforts to keep health care options reasonable for families relying on government or insurance for their medical needs. Additionally, the company is constantly alert to changes in legislation and insurance practices.
About 20 years ago, Bill was instrumental in organizing a network of medical equipment suppliers in North Carolina to help independent providers remain competitive in a market that was quickly changing thanks to the onset of managed care. The resulting organization has become the most successful network of medical equipment providers in the country.
Griffin Home Health Care, Inc. is accredited by the Accreditation Commission for Healthcare, a national organization. “They take all the regulations that are imposed upon us from the N.C. Pharmacy Board, Medicare/Medicaid and boil them down and consolidate them into accreditation standards,” comments Bill.
“The regulations touch upon every aspect of the business from human resources to fire extinguishers, and dictates the training of our folks in a positive manner,” says Richie. “Every three years, we have to pay for an internal industry audit. They ride along with our technicians, look at our charts, and review our policies. It’s a learning process for our employees.”
When asked about challenges, the Griffins agree: regulations and big government. The problems stem from “competitive bidding” legislation enacted during the second Bush administration. “It’s anything but competitive bidding,” laments Bill. “It was shoved down the throats of this industry and the problems are endless.”
Under the rules, people who are unlicensed to work in a particular state can submit very low bids bringing the median bid down below what is a legitimate bid amount, making it difficult to get a legitimate bid through the process. The end result is loss of care, reduction in quality and businesses are closing down, according to the Griffins.
“They are limiting the number of providers that can provide a service. When we entered business, there were at least 50 competitors; now there are three or so. That creates an access problem for patients,” says Richie.
“Plus, Medicare is making it so difficult for patients to qualify for services; patients must jump through so many hoops. If we don’t take care of that patient, they have to go to the emergency room, for instance, for when they are short of breath and need oxygen and equipment. Congress needs to see that this is a very shortsighted and expensive way of doing things,” says Bill.
Part of the Griffin Home Health Care philosophy is to train and retain its 26 employees. “Ninety percent of our folks had no prior industry experience. We hire smart and caring people and train them ourselves,” says Bill.
“After 14 years, I am still learning every day,” comments Richie.
As if handling the recent expansions were not enough, Richie elaborates on his plans for furthering the sports and wellness division and finalizing the succession plan. “I am quite hopeful that this business model is expandable. I would love to get to the mountains. There is a need for what we do there,” he says knowingly.
“The transition has been challenging for me,” confides Bill. “It’s [the business] my child, too. It’s harder for me to turn loose than it is for Richie to take over. I’m not ready to retire but I am ready to take a lesser role.”
Bill is sure to stay busy. He is active on the Council of Aging and works on several boards including the Western North Carolina Region of the American Red Cross. He is also a Rotary member.
“I think Richie still appreciates my counsel. Plus, he’s pretty liberal with me and my hours. I don’t rush to get in here early and don’t always stay to turn the lights off.”
Griffin Home Health Care, Inc.
9123 Monroe Rd., Ste. 135
Charlotte, N. C. 28270
Phone: 855-513-GHHC (4442)
Principals: William H. (Bill) Griffin, President and CEO; Thomas R. (Richie) Griffin, Vice President and COO; James E. (Jim) Griffin, Secretary
Locations: Charlotte, Concord and Gastonia, serving the 16-county region
Division: Griffin Sports, Health and Wellness (mygriffinsports.com)
Business: Full service health care equipment and supply company providing a wide range of home medical equipment and related supplies for individual Medicare, Medicaid, and private patients, physicians, clinics, hospice organizations, assisted living centers, nursing facilities and commercial accounts.
22The founders of Cornerstone Wealth share a passion for helping clients achieve their financial goals. It all started with collaboration. Andrew Smith, Brian Needleman and Jeff Carbone managed individual practices while working together at a former brokerage firm, and as their practices grew, they realized the value of working together and decided to pool their complementary expertise and build a team-based business in 2001.
Each partner brought a different perspective and skill set to the team; each shared a vision of building a world-class wealth management firm offering independent and unbiased advice with focus on building lasting client relationships.
Today, the firm manages assets in excess of $1 billion and offers comprehensive wealth management services through a team of 22 wealth advisors and 27 professional staff members. The firm is growing at an average of 25 percent per year by acquiring new clients, establishing new offices, and hiring experts in various sectors of the financial industry.
Building a Team
“It’s our business model that makes us different,” Smith says. “Not many people can accomplish what we’ve done together. Our business revolves around relationship management, so it is important for our team of advisors to be in front of our clients. By leveraging our infrastructure, we liberate advisors to do what they love—serve clients.
“Our success has definitely come through working as a team,” Smith continues. “We strive to understand each person’s strengths, and we allow people to focus on their passions. There are advisors and employees who enjoy client acquisition, while others enjoy the operations side of the business.
“Having the right people in an organization is imperative, but it’s also important have them in the right job. We believe that if you have passion for what you’re doing, you’ll do well.”
The division of labor came naturally to the founders.
“Jeff Carbone had been a certified financial planner,” explains Smith, “so he handled the financial planning. His specialty was financial and estate planning, so he brought a comprehensive approach to the firm.
“My passion is client acquisition, so I handled marketing and business development. Brian had many years of investment management experience, so he managed our client’s portfolios. The three of us specialized in these areas and formed a cohesive team.”
The fourth managing partner, Craig Rubrecht, joined Cornerstone in 2003, after leaving Prudential Securities. Rubrecht brought many years of advisory and management experience which was needed in the growing organization.
“As it happened, we formed our company after 9/11 when people were worried about their money,” continues Smith. “We made an effort to get out in front of as many people as possible, and it worked. I believe we were in the right place at the right time, but we also worked smart.”
Notably, says Smith, while other firms were reluctant to engage clients, the group acted proactively in the environment and landed dozens of clients who were accepting early retirement plans from such companies as AT&T and Duke Energy.
“The market rebounded strongly in 2003, so our clients thought we were miracle makers,” laughs Smith, 43, who was in his late 20s when the company started. “Our niche was the utility and telecommunications industry early on. Since then, our business has grown dramatically to include clients from all backgrounds. Today, we are diversified across retirees, business owners, executives, independently wealthy clients and athletes.”
A Model for Success
Cornerstone’s distinctive model involves expert specialists who handle the business details, such as operations and asset management, so that advisors in the field can concentrate on building relationships with clients.
“That’s what makes us different from most firms—our culture of teamwork,” Smith says. “We support our team of advisors so they don’t have to do anything but manage the relationship.”
About half of the firm’s 45 employees work in its Huntersville headquarters, while the others are in branch offices of two to five people each. The firm recently hired chartered financial analyst Chris Zaccarelli from Goldman Sachs as their chief investment officer.
Smith remarks, “There are certainly many companies moving their workforce to Charlotte, and Chris liked the area and the wonderful climate, but it had to be the right opportunity for him.”
Cornerstone has offices in Huntersville, Charlotte, Greensboro and Belmont, N.C., as well as Greenville, Lexington and Aiken, S.C. In 2016, the company will establish offices in Raleigh, N.C., and Lexington, S.C., continuing its growth throughout the Carolinas.
“Internally, I would say two areas are growing rapidly,” Smith continues. “The high net worth area is growing rapidly. We are finding these clients want the level of service we provide. The other we refer to as ‘money in motion,’ whether it’s people retiring or passing money to the next generation.
“It’s really coming at us from every direction. The baby boomers are where the majority of the wealth is,” Smith points out. “They’ve accumulated it and many of them don’t need it, so we educate clients on how to pass it to the next generation. You can either spend it during your lifetime or give it away. If you don’t anticipate using it, there are many strategies to benefit your family or charity.”
Gifting and estate planning can have greater impact than a will, which covers only parts of the estate that are not already designated by beneficiary designations and other instruments.
“That’s where we come in,” comments Smith. “We educate people about the various strategies available and bring in other professionals as needed.”
Cornerstone Wealth has its own apprenticeship program to recruit and train promising young advisors to work for the firm. So far, 11 advisors have completed the program which includes two years of training, mentoring by the partners and working with clients. Many of these advisors have earned the certified financial planner designation and other certifications.
“It’s a challenging but rewarding career,” Smith says. “We try to find those who want a career in the wealth management industry and help them grow as advisors so they become lifelong advisors of the firm. We even provide a pathway to partnership in the firm, similar to the structure of a law firm.”
Smith says the firm’s assets, which topped more than $1 billion under management (AUM) last year, is expected to double in the next several years. It has grown about 25 percent a year, roughly half by organic expansion and half by acquiring existing practices.
“We want to grow at a healthy pace,” Smith remarks. “Our future expansion will come from a combination of organic and inorganic growth. There are many future retirees and other clients looking for a wealth management team like ours, but there are also a lot of advisors who are looking to retire and need a succession plan. Both of these are attractive ways to grow our firm.”
Cornerstone Wealth has implemented various succession plans with financial advisors looking to exit the business. The firm has also transitioned advisors into the practice with the intention of remaining a part of the team. Some advisors desire a hybrid model, where the advisor stays in the business and transitions their clients to a new advisor(s) over a period of time.
Says Smith, “Finding a firm that can handle all of these scenarios is difficult. We offer a tailored and turnkey solution for advisors.”
“For our organization, the No. 1 issue we’re going to face is change in the regulatory environment,” Smith remarks, adding that Cornerstone has created a chief compliance officer position because, “We’re finding that we need more focus to keep up with these changes.”
“We’ve also hired executives to handle the operational aspects of the business. Three years ago, we hired Terri Fiessinger as our chief operations officer to help manage the advisors and staff in our multiple locations. This is critical role in our firm, and she has done a fantastic job.”
Cornerstone Wealth, a Registered Investment Advisor (RIA), offers three custodians—Charles Schwab, LPL Financial, and Fidelity Investments. “Our infrastructure is large enough to handle that,” Smith says. “It makes it easy to do business with us, whether you are a client or an advisor looking to join the firm.”
Many advisors joined Cornerstone during the recession, when the firm maintained its commitment to clients and weathered the downturn successfully.
“Of course, 2008 was the deepest dip in recent history,” Smith acknowledges. “We made our way through it by holding client events and programs. We got in front of our clients to educate them. It’s important to stay the course during volatile times: Our clients listened and were rewarded.”
A Comprehensive Approach
At Cornerstone, both advisors and portfolio managers work together in a rapidly-changing market that demands constant attention.
“This part of the business is extremely important,” Smith says. “You can’t just buy and hold any more. That’s not going to work. You have to understand what’s going on in the world and the economy. These days, that global economy includes issues in China and Europe, as well as the strength of the U.S. dollar.
“The challenge that we’re faEcing right now is that we have a global slowdown,” Smith begins describing a host of issues causing volatility. “Part of this is due to China. They overbuilt—they built cities with nobody in them. Now all of a sudden they have this real estate glut. Even so, there are going to be certain industries that benefit from the 1.3 billion people who live there.
“At the same time, Europe faces a refugee crisis and terrorist fears while it struggles to rebuild its economy.
“Meanwhile, the U.S. has stopped printing money and our dollar has gotten quite strong against other currencies. From a currency standpoint, your dollar would go a lot further today, which impacts trade profits.
“There are many external factors,” Smith adds. “There’s terrorism and cross-border conflicts we need to keep in mind. We’ve lived with this in the past, but now their literally on the news every day.”
Cornerstone Wealth holds client events at all of its locations twice a year—with updates on markets, the economy, and financial planning concepts as well as motivational or topical speakers.
There is no doubt that at Cornerstone Wealth, their passion for serving their clients is the fundamental cornerstone of their success.
“Clear, concise information shared frequently…Engaging interaction between brokers, counselors and clients providing more meaningful strategies to best serve client needs…Constant analysis, research and educational support to stay abreast of global changes and how those changes affect portfolios—at Cornerstone Wealth, we endeavor to keep people informed and aware of changing market influences, market disruptions and significant business trends,” says Smith.
“Collectively, our passion drives our work ethic to not only meet, but to exceed expectations.”