Business Spotlight: University Properties & Management Inc.

Owner: Ron Looney

Founded: 1994

Address: 717 S. Kimbrough Ave., Ste. 2, Springfield, MO 65806

Phone: (417) 864-0012

Web: www.university-properties.com

E-mail: uprental@aol.com

Services: Leasing and redevelopment of residential apartments, houses and commercial office space

Employees: 4

2007 Revenues: $1 million

Springfield native Ron Looney made his mark in the investment business with a 19-year career with Merrill Lynch. In 1994, he moved back to Springfield rather than accept a corporate position in New Jersey and started his own real estate investment company, University Properties & Management Inc.

“I bought stock for 16 years in Merrill Lynch and kept it, and it did well. That was the basis I used to start my own investment firm,” explains Looney.

University Properties is an umbrella company that manages Looney’s investment properties, including Willow Walk LLC, National South LLC and Private Investment Inc.

In 1996, Andy Dalton became a partner in University Properties after the two met through friends and started investing together. A year later, they began managing other people’s property as well as their own, but it never accounted for more than 1 percent of University Properties’ revenues, according to Looney.

“Managing property is not lucrative. It’s hard to have your heart in someone else’s property,” adds Looney.

In 2005, Looney and Dalton, former City Utilities general counsel, decided to scale back management of property owned by others and exited completely from that part of the business in 2007. They then focused on buying properties, and Looney says almost every property purchased was distressed or from an auction or quick liquidation sale.

Even though the current housing market makes buying attractive, Looney says he and his partner are now downsizing inventory – from 500 units at the beginning of the year to 250 currently.

“We’re both more income-minded now and not focusing on expansion,” explains Looney, 52. “Equity building is not as important as you get a little older.”

Looney also says they’re expanding into other investments, including triple-net leases where the tenant pays the insurance, maintenance and property taxes in addition to paying the owner rent for land and the building. Looney calls it a “quiet, serene investment.”

After a recent sale of property for an undisclosed price to FedEx, Looney is considering reinvestment in the local triple-net lease market.

University Properties’ 850-square-foot office is in a converted house at 717 S. Kimbrough near Missouri State University, which is also where most of the company’s apartments, houses and commercial rental units are located.

Looney says rental rates of $300 to $400 for one bedroom, $400 to $600 for two bedrooms and $600 to $800 for houses are a market medium effective for students. Ninety-five percent of University Properties’ 400 tenants are students, and according to Looney, properties run 99 percent full at all times.

Looney credits Springfield businessman John Q. Hammons with the idea to focus on properties around the university.

“Mr. Hammons told me if I go to state capitals and universities, they are practically recession-proof,” Looney says.

Looney also says concentrating the units in one area provides easy access for showing potential tenants or completing maintenance. Annual leases end July 30 each year, and the average student stays two years in the same rental. Looney explains that he, his staff of four and several subcontractors generally have 48 hours to get 100 units ready for new tenants.

“For us, it’s a seasonal business. From July 15 to Aug. 15, it’s crazy busy. We’ve got 10 to 15 people walking in at a time wanting a place to live,” Looney describes. “After we get them all settled in, the next 11 months are quiet, and we’re just doing routine maintenance.”

Looney says 70 percent of University Properties’ approximately $1 million annual revenues are from residential rentals, 7 percent from commercial rentals and the remainder from other investments.

Ryan Tiller, owner of Dining by Design and Wellington banquet facilities, was a commercial tenant for seven years at 1330 E. Cherry St., where he rented 1,200 square feet for $900 at the beginning of his occupancy and $995 by the time he left in July 2008.

“It was just the perfect place for us. I would’ve kept it, but I had a new location that I owned,” says Tiller.

Tiller describes Looney as easy to deal with, allowing him to operate while still checking in occasionally.

“A lot of commercial real estate agents are high pressure. He was more interested in what was a good fit for me,” Tiller adds.

Looney hasn’t established his exit strategy from University Properties. He just plans to continue managing his property and investments.

“The key is to enjoy your client base or whoever provides your revenue,” he says. “If not, it’s time to move on.”