Forty years ago, Steven Bell, founder and chairman of Bell Partners, was a successful real estate broker in Greensboro, N.C. In 1976, he decided to strike out on his own, so he cobbled together the funds he needed to buy apartments and retail in his home state. He started with fewer than 20 employees and five properties with a total of 258 apartments.
“When I first started, I couldn’t afford the nice stuff,” Bell remembers. “We would go to a small town in North Carolina, and we would buy one of the better properties in that small town. Fifty to 100 units would be typical.”
And, over time, the company grew. And grew. Now, Bell heads a firm with a foothold in 14 states that manages tens of thousands of units.
“I knew we would have the ability to raise money and acquire good assets,” Bell says. “But I would have never imagined we’d be so geographically diverse. I wouldn’t have imagined that we would have operated at our peak—nearly 70,000 units. I wouldn’t have thought that would have secured such significant capital from institutions.”
From Regional to National Player
While Bell's company has been evolving for more than three decades, 2008, the year the financial markets almost collapsed, was a landmark year in the history of the firm. That was the year the company reached beyond its roots as a sleepy Southern apartment owner to become a national apartment owner that deployed capital from around the world to buy assets.
That year, Bell & Co. made a deal that put it on the map nationally, teaming up with DRA Advisors to purchase an 86-community portfolio from UDR. Then, the firm changed its name, going from Steven D. Bell & Co. to Bell Partners. Along with that name change, which signified a focus on the firm itself rather than on its founder, the company revamped its management team over the next couple of years.
Steven’s sons Jon and Durant transitioned from principals to co-managing partners, and AvalonBay veteran Robert Slater joined as chief operating officer. Then, the company added more REIT talent, including AvalonBay vet Lili Dunn, who was named president earlier this year.
“We talked about building a sustainable company,” Jon Bell says. “So we decided to surround ourselves with a lot of great people—public company people. People thought Bell must be posturing to go public because they’re bringing in a lot of public company people. We were trying to build a best-in-class apartment company that operated like a public company, but in a private, entrepreneurial-type setting.”
Dunn brought in that new public perspective from AvalonBay. “Given my 20-year experience with AVB and its predecessor, Trammell Crow Residential, I was able to supplement the Bells’ entrepreneurial spirit and strong track record with the strategic processes, disciplines, and reporting I learned from my AVB tenure,” she says. “The key was not to try to change what made Bell special.”
The goal, Jon Bell says, was to build a company with public institution discipline, infrastructure, governance, and systems in a private, entrepreneurial setting. That required even more manpower.
“We deepened our investment platform by adding a lot of seasoned professionals to enhance our expertise in areas like market research, asset management, construction management, investor relations, reporting, and property taxes,” Dunn says.
Jon Bell also focused the firm strictly on apartments; it stopped acquiring commercial projects, which at the time made up about 10% of its portfolio. That was a significant strategic change.
“To be the best in the country, you have to be focused on one thing instead of a bunch of different things,” Jon Bell says. “If we put all of our focus on the apartment industry, then we have the best chance of success. Our core competency since the genesis of our company has always been the apartment sector.”
Those changes coincided with a shift in equity sources—with Bell moving to more institutional money backers.
“Once we were able to connect to institutions, that enabled us to go after anything if we really liked it,” Steven Bell says. “Being from Greensboro, we didn’t have the contacts and the platform that would attract the institutions. Lili and Jon spent a lot of time cultivating those relationships. I used to raise high–net worth money every quarter. Today, we spend far less time raising that money.”
Along with Bell’s move to enlarge its investor and talent bases, the company has continued to expand, becoming the 13th-largest apartment manager in the country. For instance, last year it made the largest transaction recorded in Denver, buying the Horizons at Rock Creek, a 1,206-unit property in Superior, Colo., for approximately $250 million.
Jon Bell says that expansion should continue.
“We’ll continue to have thoughtful geographic expansion,” he says. “We’re not trying to take over the world, but we think we can take our strategy and replicate that in other key markets.”
The company will also continue to look to add new investors to the fold. It recently added two funds, included one $425 million one that it closed last summer that included domestic and foreign investors.
“As far as growth, you’ll continue to see us expand our investor base to incorporate more global investors. We have some non-U.S. investors currently,” Jon Bell says.
Beyond, that Jon Bell says the only thing that’s known is that things will change. Every three to five years, Bell Partners goes through a formal process of defining its strategy as it continues to build out its team, talent, and platform.
“Status quo is not in our corporate DNA,” Jon Bell says. “We’re always evolving. The last 10 years have been particularly pronounced as we've shifted from a company that had been previously focused in one region to almost the whole country.”
No one’s role has evolved more than Steven Bell's. As his sons and Dunn have taken over the business, he’s no longer solely running things, but he’s still active, visiting properties, helping raise money, and grooming Durant to pick up his capital-raising responsibilities.
But mainly he’s focused forward.
“I don’t look back very much,” the company founder says. “My goal is to be a great company long term. What we did 20 years ago doesn’t make a great deal of difference. I want to attract the quality of people that we are attracting and, once we attract them, I want to make sure to keep them as long as we can.”