When the founder of a private apartment firm needs a new face at the top to help push growth, he or she has two options—turn to competitors and pick off young talent or promote from within. Lawrence R. Gottesdiener took a different approach. The founder and chairman of Newton, Mass.-based Northland Investment Corp., turned to … his lawyer?
In Gottesdiener's defense, Steven P. Rosenthal, Northland's current CEO, had entrepreneurial experience and a track record running a much bigger firm. As co-managing partner at Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C., he propelled growth, doubling the number of attorneys from 250 to 500 and opening three offices in California as well as one in London.
Gottesdiener turned to Rosenthal because he wanted someone to grow the company and put the systems in place to possibly take Northland public one day. “He was running a much bigger company,” Gottesdiener says. “He was my most trusted advisor and one of the most capable business people I have ever met. He balances an ability to see the big picture and execute on the details. He is an outstanding strategic thinker and knows how to develop and maintain relationships.”
By the late summer of 2007, after six years of pressure by Gottesdiener, Rosenthal made the jump to Northland. “I was an old-fashioned business lawyer, and Northland was one of my clients. [But] Larry talked me into coming here to run the company,” Rosenthal says. “I wanted to see if I could do it. I've known Larry for 15 years. I was his lawyer as he built and grew the company.”
Now, Rosenthal is bringing an entrepreneurial spirit to the real estate industry. The former lawyer and Gottesdiener, the veteran real estate executive who made it through the early '90s and lived to tell about it, are looking to follow the exact same path as a number of REITs, institutional investors, and opportunity funds right now—find good multifamily assets at discount prices.
So what makes them different? Unlike some of their bigger competitors, they started buying last year. Targeting multifamily assets in six markets, Northland bought up 27 properties—a total of 6,386 units—from 2007 to 2008 (as of press time) and is gearing up to continue its buying streak in 2009. While there's an inherent risk in buying in a market where deal making has been described as trying to catch a falling knife, Northland is a firm that's proud to call itself contrarian.
When Rosenthal officially came on board, the company issued a release saying that Rosenthal would be charged with “stewarding Northland's growth.” If Rosenthal's mandate was growth, then Northland was certainly the right place to go. “Our business platform allows us to shift into regions or asset classes,” Gottesdiener says. “In this case, we're loading up on multifamily.”
Given the availability of debt, shortage of new supply, and demand from echo boomers, baby boomers, and immigrants, multifamily was the obvious growth choice. Plus, other asset classes were seeing growing problems. “Multifamily is fairly stable and predictable,” says William M. Thompson, vice president of asset management for Northland. “We may not see rents rising like the last few years, but at least there's some predictability to it.”