The Property Gambler

The headquarters of Warren Davis Properties says much about the man behind the property management company with holdings of roughly 2.4 million square feet of southwest Missouri’s commercial real estate. The building, 1540 W. Battlefield Road, rests adjacent to a property the company owns and, frankly, took a gamble on.

The former Smitty’s and Albertson’s grocery store sat vacant nearly four years before Mercy signed an agreement in the summer of 2008 for its in-home and hospice services administration.

Now, the Davis Properties headquarters features a remodeled interior with brown leather-lined walls in the lobby, and a framed picture of John Wayne sits prominently on an extra desk in Warren Davis’ personal office.

A big Wayne fan, Davis admits he’s a risk taker, and he’s not afraid to put his money down on any deal that suits him.

“Warren loves the hunt,” said Kim Harrington, Davis’ daughter and a partner in the business. “It’s the hunt of buying a building. He’s always looking.”

The company’s portfolio features a number of notable acquisitions since 2008, including the roughly 1 million-square-foot former Solo Cup plant, the former Circuit City big box and Elfindale Center. The company purchased 11 properties during recession years 2008 and 2009.

In May, Davis Properties purchased the 65,000-square-foot United Healthcare building, 1930 W. Bennett St., for an undisclosed amount, and it opened a newly renovated 230,000-square-foot building connected to the Solo Cup plant for NewStream Enterprises, a division of SRC Holdings Corp.

Davis said potential United Healthcare property buyers shied away because management of the building was held by a receiver, and roughly 20,000 square feet still needs to be leased.

Bold moves are nothing new for Davis Properties, however.

Davis Properties got started in 1994 after Davis retired and sold the family’s 59-year-old automotive service business, Orval Davis Tire Co. in Bolivar. The first property Davis purchased was the Woodruff Building, and he followed that up with a purchase of the McDaniel Building. Davis Properties also owned the Heer’s building between 1995 and 2004.

While those three stand out as failures in terms of renovations and establishing long-term tenants, Davis said he managed to make a sizable profit on Heer’s and felt he left all three in capable hands when they were sold. Davis Properties sold the Heer’s building to developer Vaughn Prost for $2.2 million after buying the building for $100,000, according to SBJ archives.

Davis said his philosophy is to find older, vacant properties to fix and fill.

“We’re buying buildings that are usable or we’re buying buildings that need to be completely renovated,” he said.

Officials say flexibility is a signature of the company’s property portfolio.

“You’ve got to have inventory. If you don’t have flexibility in your size of properties, you might be missing out on a tenant that would be nothing but beneficial to the company and community,” Harrington said.

The company’s commitment to renovation and flexibility can perhaps best be seen in its August 2010 purchase of the Solo Cup building on 80 acres for $7.9 million. Though Davis declined to disclose the company’s financials or transaction specifics, the United Healthcare building was listed for around $118 per square foot at $7.7 million, well above the estimated $8.40 per square foot for the Solo Cup plant.

Springfield City Council voted unanimously in December to issue up to $65 million in industrial development revenue bonds for improvements to help attract tenants and jobs at the former plant. Davis is required to go back to council to request any bond issuance.

Davis said he thinks it could be up to three years before he begins to see a return on the company’s investment, but he added that both Davis Properties and the city could benefit greatly by taking the risk.

Two tenant prospects have looked at leasing the entire Solo Cup facility, he said, and about five others have considered leasing its largest proposed section of 135,000 square feet. Tentative plans could break up the building into nine sections starting as small as 30,000 square feet.

“We can do two or three pieces or whatever (the client) needs,” Davis said. “Our flexibility is a big advantage for us because we’re not set on doing one thing.”

Jared Enterprises is among a handful of area commercial property management and development companies, including Randy Magers Enterprises and R.B. Murray Co., that could be considered competitors of Davis Properties.

Curtis Jared, chief operating officer of Jared Properties, said moves such as the purchase of the Solo Cup plant are too risky for his company, which owns nearly 100 properties representing 1.2 million square feet.

“Would we ever buy something like that? No. Not unless we had an immediate use for it,” Jared said. “Some things we are willing to take a risk on, but you’re talking about an older building.”

Jared Enterprises, he said, looks to buy and hold property with long-term tenants, even if those properties cost a little more. Jared described Davis Properties as “a flipper” – a company looking to take risks on older properties for a big payout later.

“Cash is still king,” Jared said of his company’s philosophy.

Harrington said its not always easy adjusting to the whims of her father.

“It’s not all flowers and rainbows,” Harrington said, but added that playing it safe is a recipe for failure. “You don’t become as successful as Warren has by being cautious.”[[In-content Ad]]