Monday, March 21, 2011;
One of my favorite intellectual exercises, often with the help of others, is examining a business through a different lens.
McDonald's or Starbucks are real estate companies as much as food and beverage stops. Disney On Ice's ideal customer isn't a 10-year-old; it is a parent who wants to be a hero to her kid. And General Electric's biggest strength is management, not light bulbs.
Washington developer, technology entrepreneur, restaurateur and nightclub owner Anthony Lanier prompted me to look at real estate differently when he explained the business discipline that built a Georgetown barony that occupies 60 buildings and enough square footage to fill eight football fields.
"We built a conveyor belt for renovation," said Lanier (pronounced lon-YAY), 59, explaining the methodology that turned dilapidated townhouses into profitable stores and offices.
Lanier's assembly line was made up of engineers, architects, historical preservation specialists, zoning lawyers and construction firms that could pump out renovated buildings one after another.
The first purchase in the mid-1990s was a townhouse at 3060 M St. NW. Price: $540,000. It's now worth about $2 million, Lanier said. Next was a townhouse down the street. Cost: About $1 million. He bought 3067 M St. NW for $600,000. Then he bought 3210 M St. NW out of foreclosure.
Buy, renovate, lease. Repeat.
Through that process, Lanier built profit margins and credibility with city authorities. "That aside, the 'salami approach' served as an excellent risk diversification, as no project and therefore, mistake, in itself was big enough for it to make a significant impact," he said.
It took 10 years, increasing property values and retail demand, but Lanier's bets are paying off. His Georgetown tenants include Brooks Brothers, Crate & Barrel's CB2 chain, MAC Cosmetics and Madewell. His property portfolio is worth several hundred million.
The successes have not come without controversy. He is embroiled in a very public, five-year court case with developer Herb Miller over the rights to purchase Georgetown Park mall.
The Lanier empire includes more than 200 employees across several companies, including the real estate management and development company EastBanc Inc., EastBanc Technologies, Kafe Leopold restaurant and L2 Lounge, his trendy nightclub where celebrities such as Dallas Mavericks owner Mark Cuban and comic Kathy Griffin were hanging out recently.
Lanier is as interesting and eclectic an entrepreneur as I have ever met. He isn't thumpingly rich like the Lerners (real estate, baseball) and Rales brothers (Danaher Corp.). But's he's got money. Probably tens of millions.
EastBanc's flagship real estate holding - Lanier's big home run in the business parlance - is an office building at 1875 Pennsylvania Ave. NW (home of the WilmerHale law firm), believed to be worth between $160 and $200 million. Lanier's interest after splits with other investors and debt is worth more than $30 million.
His technology company is thriving. Thanks to his daughter's Russian father-in-law, EastBanc Technologies has a pipeline to Russian computer talent in Novosibirsk, that nation's third-largest city and a center for scientific research. EastBanc Technologies grosses $15 million and earns healthy profit margins, Lanier said.
And Kafe Leopold and L2 make money, but not lots, he acknowledges. "I'm doing all right," he said.
Lanier's father came from an old American mid-Atlantic banking family. Lanier was born in Brazil. His mother is from Austria. Lanier speaks German, English, Portuguese and a smattering of other languages. He and his Portuguese wife, Isabel, live in Georgetown. He has three grown children.
After attending Vienna University, Lanier worked at several financial jobs, including DRG Financial, a U.S.-based mortgage bank. He also learned how to invest in real estate. He started traveling to Washington on business in the early 1980s, and later settled here, where he founded EastBanc to work on the financial side of commercial real estate.
"Since it was all about money, I called it 'banc,' " Lanier said.
His first success was a $5 million profit he made for his role in buying, renovating and selling a $32 Newport News-area strip mall that was half vacant. With a $27 million loan from the Resolution Trust Corp., which administered many of the failed savings and loan banks in the 1980s, Lanier bought the property. His timing was right. A real estate broker lured "big box" retailers such as PetSmart and Sports Authority, and the strip mall got back on its feet.
"That was a good break for me," Lanier said.
When the real estate market crashed in the early 1990s, Lanier ventured into the budding technology space, teaming up with the German-based Burda Media on investment projects, including HotWired magazine. That's when Lanier met Andy Grove, the CEO of Intel, the computer chip manufacturer. Lanier recalls Grove showing off a new technology that enabled doctors in India and Baltimore to communicate on video in real time.
"I didn't understand a word of it," Lanier said. "It took me seven years to understand how he was explaining the Internet as organized disorder."
After the D.C. real estate market rebounded in the mid-1990s, Lanier dove back in with the support of German banks and institutions. That's when his Georgetown strategy started to take off.
Around the same time, Lanier sold off his investments with Burda and used the proceeds to invest in EastBanc Technologies with his son-in-law and his son-in-law's father.
"The father-in-law came up with the idea," Lanier said. They would build a high-end, systems technology company that would provide computer and software assistance for people working in the health, media, finance and government sectors.
The father-in-law, a scientist from Novosibirsk, said the business could be fueled by the engineers, mathematicians and software designers from the Siberian city. Lanier turned to the legal system, using smart immigration attorneys to find the visas to import the Russian noggins. About 100 have emigrated here from Siberia.
"I created a business on the run," said Lanier, who owns a significant stake in the tech firm.
His latest venture is another real estate conveyor operation. This one is in Lisbon, where he has purchased 20 contiguous old buildings, or "little palaces," as he calls them. They are nestled up against a botanical garden in the middle of the city.
"We want to bring all our lessons from Georgetown to bear," he says.