The Early YearsIn the early years, the apartment communities were in less than desirable neighborhoods. As such, a freshly painted and immaculately cleaned apartment was very marketable. Despite the efforts to provide well-maintained apartments to a community in need of quality housing, the housing activists of the 1970’s targeted BRC, and its competitors. This group coached tenants on techniques to avoid paying rent and tried, on several occasions, to organize rent strikes to paralyze the Company’s operations. Steve and Jim knew they offered a first class product and faced this group head on. Eventually, they prevailed; however, through this struggle, they realized that they had to start moving the operations into better locations and neighborhoods, where such issues were not as prevalent.
The challenge was finding the financial resources to acquire properties in more desirable neighborhoods. In 1975, they were struggling to make mortgage payments to an out of town financier and were told to deliver the mortgage payments in person to an office located in Norris Hills Apartments, one the of the financier’s properties in Norristown, Pa.
The financier recognized their diligence in making every effort to stay current in the mortgage obligations and appreciated how they dealt with the financial challenges of the property. Because of Steve and Jim’s diligence and sincere effort, the financier agreed to sell Norris Hills to them, financing the purchase with a negligible down payment. Norris Hills was burdened with deferred maintenance and occupancy issues at the time of acquisition.
He was the most distressed asset in the Company’s portfolio, but this didn’t stop Jim and Steve from successfully turning it around. By 1980 the company owned and managed slightly over 1,000 apartments in the Philadelphia suburbs. After reflecting on the company’s dealings over the past several years, Steve and Jim saw that if they had better knowledge and expertise to properly analyze and underwrite acquisitions, they would not have purchased some of their existing assets. They often struggled. However, learning from working out the obstacles of turning around a distressed property, they became better and better at managing them with efficiency, and integrity.
The Basic FundamentalsWhile the Company’s current Fundamentals were a long way from being formalized, there were several take away lessons from these experiences which ultimately shaped BRC’s success and formed their core principals of today:
- “We always do the right thing” They recognized the Norris Hills Financier’s right to have the payments received, and did whatever possible to honor this commitment. The only reason they were able to purchase Norris Hills was because of their efforts to stay current with the mortgage on a different asset. It is ironic that opportunities arise when least expected, and by simply doing the right thing, positive results are achieved.
- “We take ownership” They had every excuse possible not to honor their financing commitment; however, they took ownership of their problems and found solutions to make it work.
- “We are responsive” Once funds were available to make the required payments, they were hand-delivered to the financier on the same day rather than be delayed any further.