Where Others Are Hitting The Brakes, Lincoln Property Execs Plan To Step On The Gas To Drive Growth

In an era when many commercial real estate companies are scaling back, Lincoln Property Co. is embarking on an ambitious growth plan that has already resulted in several key appointments and acquisitions.

Earlier this year, Connecticut-based Stone Point Capital made what was characterized as a sizable investment in the Dallas-based firm that will allow it to add more industrial, mixed-use, office, retail, production studio and life sciences properties to its portfolio.

At the same time, Clay Duvall and David Binswanger became co-CEOs. The pair succeeded founder and Chairman Mack Pogue and Duvall's father, CEO and President Bill Duvall.

“Stone Point gave us some capital to strategically grow,” the younger Duvall said. “At some point, when the capital markets do unthaw, we will have an opportunity to take advantage of what’s been a dislocation in the marketplace.”

Taking over the helm of a major company as the nation hurtled toward a possible recession was daunting, but Duvall and Binswanger said the business’s strong foundation gave them the confidence to weather the storm. 

“The most critical thing we had to do the day we got the keys was just to accept the reality of where we are and align with it,” Binswanger said. “Lincoln has accelerated in downturns, and the reason is because it’s highly adaptable — we have amazing people in the field and multiple service lines.” 

The firm’s property management business serves as its base, but it also leases, develops and provides advisory services. It is active in 35 markets across the U.S. and overseas.

Since 2018, the company has acquired and developed 62M SF of properties worth $24B. Stone Point’s investment added to those numbers, but it also enabled LPC to assemble a team it believed was capable of growing the company despite economic turmoil.

Maria Stamolis was hired in June as the firm’s new chief investment officer and head of investment management. In July, LPC tapped Alison Daubert as chief strategy and M&A officer, and Daniel Roth was named chief financial and operating officer. Christy Ingle is the executive team’s latest addition, having been named chief marketing and communications officer in early August.

Daubert’s hiring underscored the firm’s intention to double down on mergers and acquisitions. Since her appointment, the firm has acquired RiverRock Real Estate Group, which added more than 50M SF of office, retail and industrial real estate to LPC’s property management portfolio.

In July, LPC also announced a joint venture with California-based Paragon Commercial Group, a firm that specializes in the development and acquisition of value-add retail properties.

“There’s a big generational gap in real estate because of the cyclical nature, and there’s a lot of regionally owned private companies looking for a succession plan,” Binswanger said. “Given that Clay and I just went through that with Clay’s dad and Mack Pogue, we’ve sat on the other side of the table. We know a lot of the concerns that are out there, and we think we can be the acquirer of choice in that regard.”

When it comes to the firm’s M&A strategy, Duvall and Binswanger said they will rely on regional managers to build the pipeline with the most competitive companies to pursue. They plan to predominantly focus on existing service lines rather than building new areas of business.

The team expects to acquire one or two more companies before the end of this year, Binswanger said.

“Stone Point invested in us through a $10B vehicle, so there’s a lot of dry powder for us to pursue both real estate capital needs and operating company capital needs,” he said. “As long as it’s accretive and a cultural fit, we’re going to continue to buy and merge with smart opportunities.”

Pain in the capital markets has caused a slowdown in LPC’s development and construction business. In the meantime, the firm is focusing on business lines that provide clients with the guidance needed to weather the downturn. Areas like property and facilities management and owner and occupier services have thrived as a consequence, Binswanger said.

“When things are going OK and you’re just flying at 60,000 feet and cruising, you maybe don’t need the greatest expert,” he said. “But when there’s a dislocation in the market like we’re feeling today, domain expertise really, really matters. That’s something we bring in every asset class that we’re in and in every geographic market that we are active in.”

Binswanger described the firm as in lockstep with the broader market in terms of its reduction in transactions, but it would like to see its assets under management grow from $6B to north of $10B over the next five years. 

The firm has gained 18M SF of property management business from distressed assets so far this year. Like most of the industry, LPC has scaled back on office, but it hasn’t written off the beleaguered asset class completely.

“We will know more about what works, what doesn’t work and what tenants are thinking because of our corporate solutions business,” he said. “You'll see us sometime in the next 18 months acting heavily in that world, prior to the broader capital markets beginning to see what's happening.”

These are challenging times, Binswanger and Duvall said, but the future is bright for LPC. After nearly 60 years in business, the pair said the firm is well-positioned to rise to the occasion. 

“We see ourselves as standing on the shoulders of giants,” Duvall said, referring to his father and Pogue. “Those men built what we all hope to be a recession-resistant franchise.”