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Opportunities and Advantages: Looking Back on a Real Estate Career with Bob Lowe

Opportunities and Advantages: Looking Back on a Real Estate Career with Bob Lowe


Robert Lowe (right), founder and chairman of Lowe Enterprises, speaking at the ULI South Carolina Capital Markets Conference on Kiawah Island.

In 2018, real estate firm Lowe
Enterprises, together with partner Geolo Capital, sold its hotel operating
subsidiary Two Roads Hospitality to Hyatt Hotels for $480 million. It was a
price that surprised the hospitality world and a big step for the Los Angeles–based
company, which had started from nothing 46 years before.

That kind of exit was not
part of some original projection, said Bob Lowe, the company’s founder and a
ULI Foundation Governor, speaking at a ULI event on Kiawah Island, South Carolina,
in mid-November. Instead, he explained, he and his colleagues were simply
careful to take advantage of possibilities as they arose.

“If I’d told you 47 years ago
that I had a great plan, I’d have been lying. But I had a commitment to some strategic
issues, and we were very opportunistic along the way,” said Lowe. “You have to
have a strategy and goals, but be alert to opportunities.”

Lowe said he was always
attracted to real estate and the innovation it requires. After graduating from
Stanford Business School in 1964, he worked for a few development companies and
then headed out on his own in 1972. A former boss said he’d invest $100,000, so
Lowe and his partners scraped together some funding and got into the resort
condominium business, building units in Palm Desert, California, and downtown
Aspen, Colorado.

But in 1974 recession struck,
and the company needed to diversify. After looking around, it moved into the
business of managing gyms and other workout centers—something that was just
becoming popular—and redeveloping condos.

The latter turned out to be
extremely beneficial to the company. After redeveloping the units, “we were
wondering who’d manage the condos on behalf of their owners,” remembered Lowe.
“So we formed a company to do that ourselves.” Forty-five years later, the
company is still doing it, and is now one of the largest condo property
management firms in the United States.

Diversifying like that was,
indeed, part of a bigger plan. Lowe himself wanted to engage in a number of
business areas so that the company would have predictable revenue streams
coming from management activities, and some capital gains ideally flowing from
investments.

Today, the company says that it
has developed, managed, or acquired over $28 billion of real estate assets
nationally. Development has been a strong theme throughout Lowe’s history; over
the decades, the firm has worked in urban and resort areas around the country,
often returning repeatedly to familiar markets.

For example, Lowe visited
South Carolina in 1990. He was considering investing in the Isle of Palms, a
barrier island near Charleston, but Hurricane Hugo had decimated the region the
year before and it was not clear if committing to the area made any sense. “But
then we saw historic Charleston,” he remembered. “I said, this is a place where
we should be in business.” Within a few years, the company had acquired and
renovated Wild Dunes, a resort on the Isle of Palms.

Fast-forward 27 years. In
2017, Lowe returned to Charleston’s booming real estate market and purchased a
waterfront property for $38 million. The site, formerly occupied by the South Carolina
State Ports Authority, will be a full-service, 225-room hotel, the first on the
waterfront. At the same time, the Wild Dunes resort—which has been upgraded
over time and is now a 1,600-acre (647 ha) beachfront complex—will gain a
150-room hotel.  

Lowe Enterprises is also
working on a $300 million project in Culver City, California. Sitting on 6.5
acres (2.6 ha) directly adjacent to a new light-rail line station, the project
is under construction and will include 240,000 square feet (22,300 sq m) of
offices, 200 apartments, 50,000 square feet (4,600 sq m) of retail and
restaurant space, a hotel, and two acres (0.8 ha) of public green space. HBO
announced earlier this year that it will lease office space in the complex,
which is slated for completion next year.

These days, Lowe’s company has
undergone something of a shift. The sale of Two Roads Hospitality—a global
operator of 85 boutique hotels, resorts, and vacation residences that was the
result of a 2016 merger with Geolo Capital—was not initially planned. “We had
no intention of selling it; we’d never sold any of our operating businesses,”
explained Lowe. But it was one of those opportunities that could not be
ignored. Two Roads got an unsolicited offer that far exceeded its worth; as a
result, Lowe hired someone to put out feelers for other potential buyers. In
the end, Hyatt made the best offer: $480 million at the time of purchase, plus
another possible $120 million later, depending on terms determined after closing.

Now, the company has some
cash on hand that is allowing it to watch for new opportunities. That may
include investing in distressed properties like old malls and other retail
spaces that have been overbuilt.

But another result of the
sale was that Lowe, the parent firm, suddenly went from being a company of some
17,000 employees to one that employed only about 3,500 people. Perhaps
unsurprisingly, Lowe’s leaders quickly began a new management company. “We’re
back in the hospitality management business,” said Lowe. The company launched
CoralTree Hospitality Group at the start of 2019, beginning with a portfolio of
17 hotels and resorts around the country.

“We’ll be more picky now,” added Lowe, who has handed the company’s reins over to his two sons. He said he is not worried about a serious downturn in the next year, but there are some concerning signs on the horizon. “We’re being cautious—we’re trying to capitalize our projects with financial sources that can weather a downturn with us,” he explained.



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